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HULBERT: The stock market is overdue for a one-day 5% or 10% plunge


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#1 dTraderB

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Posted 18 October 2018 - 07:20 PM

Whew! If that happens I will be scooping up stocks. 

But, remember tomorrow is the anniversary of that 1987 crash. 

 

Opinion: The stock market is overdue for a one-day 5% or 10% plunge

 

Friday is the anniversary of the 1987 stock-market crash, when the Dow Jones Industrial Average plunged 22.6%

 

CHAPEL HILL, N.C. — The Dow Jones Industrial Average could drop more than 5,700 points in Friday’s trading session.

Impossible, you say?

Think again. On Oct. 19, 1987 — 31 years ago today — the Dow DJIA, -1.27% plunged 22.6%. It was the worst stock-market crash in U.S. history. An equivalent percentage drop today would cause the Dow to skid more than 5,700 points.

To be sure, just because the stock market could suffer a similar fate doesn’t mean it is likely. But most investors don’t even acknowledge that it’s possible.They’re kidding themselves.  ence another 1987-magnitude crash in our lifetimes — or that another will occur today.

https://www.marketwa...unge-2018-10-18

47748616_14769034845690_rId7.jpg

 

 



#2 dTraderB

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Posted 18 October 2018 - 07:38 PM

Very interesting take on the markets: 

To Buy The Dip Or Not To Buy The Dip, That Is The Question

 

In the post linked here at the outset, I mentioned a Friday note from JPMorgan's Nikolaos Panigirtzoglou, who pens the bank's popular "Flows and Liquidity" series. I meant to elaborate on that over the weekend, but I never got around to it, so I wanted to mention it here.

 

Panigirtzoglou concurs with his colleague Marko Kolanovic that the systematic selling has likely run its course (or at least that some of that risk was shaken out last week). But he flags a series of "positioning related" risks to U.S. equities going forward. As I mentioned on Saturday, these are not new, but they are updated, so I wanted to briefly run through them.

First of all, short interest on the NYSE isn't really that elevated, and while the latest data is current only through late last month, Panigirtzoglou says JPMorgan "doubts that [last] week's correction has resulted in the emergence of a new large short base in US stocks."

47439673-15396121050679677.png(JPMorgan)

Next, Panigirtzoglou reiterates a point he made earlier this month about a perceived lack of hedging. Specifically, he notes that put to call open interest for S&P options is "either at or below average levels".

47439673-15396122070091732.png(JPMorgan)

And then there's retail investors who, Panigirtzoglou reminds you, are still leveraged to the hilt. To wit, from the note:

Leveraged US retail investors have yet to unwind the record high leveraged positions in US stocks they had built up until May via their margin accounts. This is shown in Figure 9. Admittedly the last observation in Figure 9 is for the end of August but we doubt that this metric declined enough during September/October to allow us to argue that this source of vulnerability is no longer present.

47439673-15396122981751962.pngAll of that would appear to suggest a lack of capitulation and argues (perhaps) for further caution going forward.

 

The takeaway from all of this is that whether you buy the dip now largely depends on what it is you're concerned about.

If you're worried about a continuation of the forced de-risking we saw last week, those worries might be overblown, although, for the thousandth time, that depends entirely on whether some exogenous catalyst pushes momentum signals through key triggers and/or drives the market through key options strikes. Additionally, if volatility remains elevated, vol.-targeting funds could continue to see pressure to deleverage, adding to the systematic overhang. But those caveats aside, things are "cleaner" than they were headed into last week.

If, however, you're worried about the overall macro picture (e.g., rising rates, the Fed, the trade wars, etc.) and/or a lack of capitulation from less esoteric measures like those mentioned by JPMorgan's Panigirtzoglou, well then now might not be the best time for dip buying.



#3 zoropb

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Posted 18 October 2018 - 07:53 PM

I remember that day it was brutal, it just did not stop.  I was not in thankfully.  

 

We closed today with our potential monster in the shadows at 499 es points.   Better than last week but I would not mess with this folks. Our gang knows the piper collects on debts sooner or later. 


Love, be kind to one another, seek the truth, walk the narrow path between the ying and the yang.


#4 zoropb

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Posted 18 October 2018 - 08:15 PM

Guys I wanted to clear something about the monster.  What ever number I mention on any post that means from the prior day's close on.  So, yes from today's close 499 points await.  Be it slowly or really quick.  Usually it happens pretty quick but we never seen it charged like this. We are in new territory.  Going to be interesting how it plays out. 


Love, be kind to one another, seek the truth, walk the narrow path between the ying and the yang.


#5 denmo83

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Posted 19 October 2018 - 12:41 AM

Guys I wanted to clear something about the monster.  What ever number I mention on any post that means from the prior day's close on.  So, yes from today's close 499 points await.  Be it slowly or really quick.  Usually it happens pretty quick but we never seen it charged like this. We are in new territory.  Going to be interesting how it plays out. 

Hi zoropb...Looking for sub 1,000 on gold still. Hope all is well.



#6 zoropb

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Posted 19 October 2018 - 07:48 AM

Hi D.  good to see your around too.

 

Going to get real interesting soon. I think we have a deflationary collapse followed soon after by an out of control inflationary spiral due to the currencies going to toilet paper status.  The inflation will be mainly on #1 food and the rest on things one needs everyday.  As for the rest most will not be able to afford to buy until the reset takes effect.  I keep suggesting everyone prepare best they can now while they still can and specially spiritually, your going to need it. 

 

It is going to be out of this world what is coming!   I will leave it there. 


Love, be kind to one another, seek the truth, walk the narrow path between the ying and the yang.


#7 dTraderB

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Posted 19 October 2018 - 08:26 AM

I would be very surprised if SPX finsihes up today .... BUT I am always prepared to be surprised by the market and thus I go with the flow, not against it, at least on a ST basis. Looking to replenish my QQQ put holdings, down to only 5

#8 AChartist

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Posted 19 October 2018 - 08:30 AM

Daimler stock down. Very strange I was looking to replace an expiring lease and getting trapped

because there are no 2019's stocked yet late Oct, Audi too.

Maybe trump is just changing sentiment about paying their tarrifs.

But I guess actual work actual jobs, blue collar, doesnt translate to premium cars either. Thinks are

changing from fake paper to actual work ideology.


"marxism-lennonism-communism always fails and never worked, because I know

some of them, and they don't work"  M.Jordan


#9 redfoliage2

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Posted 19 October 2018 - 08:42 AM

I would be very surprised if SPX finsihes up today .... BUT I am always prepared to be surprised by the market and thus I go with the flow, not against it, at least on a ST basis. Looking to replenish my QQQ put holdings, down to only 5

ES and NQ both made SAR Breakout on intra-day charts and also made breakout on Fib resistances.   I see a big bounce is in the cards for today.  We should see more in the afternoon after the European markets closed.


Edited by redfoliage2, 19 October 2018 - 08:46 AM.


#10 redfoliage2

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Posted 19 October 2018 - 08:54 AM

I see this market has bottomed ..................


Edited by redfoliage2, 19 October 2018 - 09:02 AM.