As I mentioned in previous posts, I had considered some kind of flash crash to be a better than average probability event. The last 2 days have merely been down days with higher volume (especially yesterday).
This market could continue to leak and then maybe find some reason (technical?) for a rebound. However, I think we have crossed the threshold of deflecting bad news in the short term. Meaning, a big news type of negative, which might have not affected the market 2-3 weeks ago, would in my opinion, affect it now. Something like that would likely whack equities for a one day 3-5% loss. And would likely immediately muster a soothing speech from #UncleBen Bernanke.
Does Flash = Continued Crash, Why Are You Listening to Me & Other Questions
The flash crash though, would likely set up for another move higher, not a move lower but this is all opinion – in the meantime we’ll have to watch what happens.
In other words, if you’re a deep value investor, and an unbelievable value pops up, you should consider buying. If you use charts and the chart is telling you that an up-move is imminent, why waste time with opinions? Do what you have to do.
And besides, even though #UncleBen says he won’t print, if we get another 20% stock market correction and Europe’s problems bubble again (in the headlines that is – they’ve never stopped bubbling FYI), he’ll think of some creative way to warp the laws of nature. He is a Princeton guy you know.