Quote:
Originally Posted by rounder
We need someone like 1Centaur to explain all this stuff, at a time like this.
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Common sense says that not a lot of people have decided that the world is a much worse place today than it was a week ago. The numbers that suggest economic strength are pretty good globally at this point. So why does the market drop like this?
There is a lot of automatic trading in this world, trades that happen because of patterns or because ETFs just don't care what something is worth. Momentum begot momentum on the way up so it had to happen on the way down. Trading without human judgment begs for greater volatility than was true historically, and the historically low volatility of the last year was ALSO because a lot of trading was trend-following a good trend.
Anecdotally, actual people seem to think this is a buying opportunity. That probably means they'll start buying as soon as the out-tide looks weak. And then the automatic trading will pick up on that momentum. There will come a day when machines/ETFs/people all want to sell, and that will feel really bad, but it does not seem likely that this pattern is setting up that way today. The market used to "know" because it was the consensus of people making judgments (wisdom of crowds). We're not exactly in that world anymore.
I'm not a stock guy, professionally, so take this for what it's worth.