I'm more than convinced that in the near future we are going to see a market crash that makes 2008 look like a joke, and possibly even the great depression look like a joke. We have Greece and the PIIGS countries basically living on borrowed time, the European Central bank finally caves in and prints money.
A normal functioning market in a healthy economy does not plunge 1000 points in one day. The news all claim it was the "fat finger" pressing a B instead of a M for trading PG. Do you actually believe that nonsense? Basically to make money these days means to buy shares at low prices and sell them at high prices. And some guy was playing a game to make people sell stock at distressed prices. Example, PG was trading at about 60 before the crash last Thursday. It plunged to $39, and recovered back to $62 as of yesterday. A lot of stop losses set in the 50s or 40s probably got taken out, and really this is how a transfer of wealth takes place from the guy who is scared and sells to the vicious shark on Wall St. You can't possibly win this game. Wall St has the tools to create any market outcome they want making this game even worse than wagering in a casino these days. In a healthy market, games like this don't happen too often at least not like that magnitude of what happened last Thursday.
So really I think this all are signs of an impending death spiral in the markets that will make 2008 look like a joke. It's what happened in the initial 50% recovery from the crash of 1929 and it is what I think is happening now. In the meantime if you are still inclined to play this game, I believe the market is ready to make a push to new highs of the year (possibly 130-140 on the SPY) in a few weeks or months, before the party ends. After all, Wall St. has to sell stocks at expensive prices which they picked up for cheap last Thursday. With every government on earth printing money that will spike oil prices, and with unemployment everywhere, I think the consumer finally rolls over.
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