This Is Exactly The Kind Of Behavior That You Would Expect
If a doctor tells you that his patient’s condition is swinging up and down wildly,is that a good sign or a bad sign? Of course the answer to that question is quite obvious. And if a doctor tells you that his patient’s condition is “stable”, is that a good sign or a bad sign? Just like in the medical world, instability is not something that is a desirable thing on Wall Street, and right now we are witnessing extreme volatility on an almost daily basis. On Thursday, the Dow was already down several hundred points when I went out to do some grocery shopping with my wife, and at the low point of the day it had fallen 611 points. But then a “miracle happened” and the Dow ended the day with an increase of 260 points. As I detailed yesterday, this is precisely the sort of behavior that you would expect during a chaotic bear market.
As Fox Business has noted, bear market rallies are typically “sharp, quick and usually short”. I figured that the momentum from Wednesday would carry over into the early portion of Thursday, so I was surprised when the Dow was down by so much as we neared the middle of the day. But then around 2 PM we witnessed an extraordinary market surge…
An 865 point swing in less than two hours is not “normal”.
In fact, it is about as far from “normal” as you can get.
Let’s talk about short covering for a moment. During huge market downturns, speculators often try to make a lot of money very rapidly by shorting stocks. But if momentum suddenly shifts, those short sellers can be caught with their pants down and the consequences can be quite dramatic. The following comes from Marketwatch…
In addition, it appears that on Thursday there was more of the “forced pension rebalancing” that Zero Hedge has been talking about…
No stock market crash in U.S. history has ever gone in a straight line. There are always huge ups and downs during every market crash, and this market crash is no exception.
Ultimately, there is no way that you can possibly interpret the behavior of the market in recent days as “healthy”…
Meanwhile, it appears that one of America’s most iconic retailers is about to go down in flames.
For years I have been warning that Sears was eventually “going to zero”, and if a last ditch rescue attempt does not materialize by the end of the day on Friday, Sears will be liquidated…
The inevitable demise of Sears could be seen from a mile away, and the same thing can be said about the country as a whole.
Our debt-fueled standard of living has been propped up by the biggest debt binge in the history of the world, and Wall Street has been transformed into the largest casino on the entire planet.
The entire U.S. economic system has become one huge Ponzi scheme, and all Ponzi schemes ultimately collapse.
Right now, we are in the early stages of a game that is going to take some time to fully play out. The pessimism that has gripped Wall Street is starting to spread throughout the general population, and many experts were stunned to learn that consumer confidence just declined for a second month in a row…
If you have been a regular visitor to my websites, then nothing that will happen over the next few months should be a surprise to you.
The inevitable consequences for decades of exceedingly foolish decisions are starting to roll in, and the bursting of “The Bubble To End All Bubbles” is going to be beyond excruciating.
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