The flash crash was just the shot across the bow. Those lows are now history for the major averages.
But something worse just happened since Friday’s rout. The vast majority of “other stocks” that are not big in the indices and subject to the whims of futures trading, have gotten smashed.
The 3 day losses in a tremendous number of lower priced stock is 10-20%. This is happening while the market is down about 5%. All the gains that were made after the July ramp after the bank’s bullshit “Stress Test” have now been given back.
These prices break their recent range lows and the majority of stocks have now fulfilled a test of the primary breakouts. It is not pretty, but they are one of the signals that the end of this destructive correction is nearing completion.
Some will speculate that Apple and whatever leadership is left must crash before a bottom is in. Others say a whoosh to SPX 1000 is needed. That may be true but it looks that 1020 is the real number. And nobody will sell Apple as the iPhone 4 is coming.
Will you buy there or will you wait for the test? There won’t be a test because testing is what the markets used to do. With HFT and follow the leader trading, you won’t get the chance. It’s all one way or the other.
Someone said it best in another thread. Some guy in Hungary scratched his balls and we are down 5%. It is a shame the market is run by fools. But we need to be ready for the moments they become really foolish. That time is fast approaching.
ADDENDUM: Perfect double bottom at the SPX May 25 low… 11:15am
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Scott, I hope your right….but I still think Copper market is not done falling….and imho the market seems to just like to follow copper around. ……
The hungarian guy comment is hilarious. Scott, thanks for your blog I really enjoy reading and listening to your experience/knowledge being shared.
great take. i agree
Nice prediction on the doji this morning.