Posted by kdadmin on August 24th, 2015.
Within minutes of the market open we were down over 150 points since Friday’s close; a 7.7% wallop out of the gate. Even after some midday recovery, we still continued our market crash, down another 81 points, to register another 4% loss.
So, it’s official …
We’ve hit correction territory (over a 10% drop) to a nice round 15% drop (intraday low) off our recent high, and a finish at 11.8% off. Yikes. While the bloodbath may, or may not, be over yet, we got within 3% of our 2012 lows. Although, we have another 40% if we’re going to hit 2008 losses (very unlikely).
Look at the graph above. Notice anything? How about that the market is often at its worst in October? More interestingly look at 2011, on the far left. Notice how August 23, 2011 was lousy, and then October got much worse? That was exactly four years and one day ago today.Coincidence? Maybe. But that outlook is what many economist think (hope) could happen this year. In other words: market crash, brief recovery, market crash, full recovery.
Of course, several of these same economists think that a weaker market will prevent the Federal Reserve from raising interest rates. Look, we’re in a correction, not the 2008 recession. My post, 20/20 Blindsight, addresses this irrational perspective; ironically from our May, 2015 market peak. It was almost like Federal Reserve Chairperson, Janet Yellen, gave me a crystal ball …
While tonight’s after hours trading for S&P500 E-Mini futures suggest the economists hope could be true, it’s by no means certain. Further, the fact that 80% of stocks traded on the Chinese Shanghai Stock Exchange hit their (~10%) loss limit for the day, as did all the futures indexes, doesn’t bode well for a calm open on the Chinese market tomorrow.
Even more interesting: what did the Chinese government did about their catastrophic losses? I’ll give you a hint. It starts with an “N …”