OT - Dow plunges 1,175 - worst point decline in history

[Tony T]

NYT: Context Matters. The Stock Market Drop Is Less Scary Than It Seems

If measured by news headlines, you might assume these are dire times in the financial markets.
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This market decline so far has returned the market roughly to its level in mid-December, less than two months ago. The 7.8 percent drop in the Standard & Poor’s 500 over the last six trading days is similar in scale and speed to drops in January 2016 and August 2015, neither of which left lasting scars, and is short of the 10 percent drop that would qualify as a market correction.
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The Dow fell by 1,175 points Monday, which represents a quite large 4.6 percent decline. But while it was the biggest single-day point decline, there were steeper percentage declines on several occasions during the global financial crisis and its aftermath, not to mention the 508- point drop in the Dow in 1987 that represented a 22.6 percent market crash.
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The S.&P. 500 did not decline by more than 2 percent on a single trading day in all of 2017, which helps explain why Friday’s 2.1 percent drop seemed so startling. (The percentage drop on Monday was a much rarer event, one that last occurred in 2011.)
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But regardless of which it becomes, it’s good for everyone’s mental health to look beyond the day’s headlines and focus instead on percentage changes instead of point changes — and on historical patterns and the “why” behind the day’s drop in the markets.

[Tony T]

….but so far tomorrow looking like the decline will continue:
FUTURES FAIR VALUE (377.75)
Fair Val Close Cur Future Change
24315.75 23468.0 -847.75
Last Updated: Mon, 5 Feb '18 | 9:05 PM ET

[54ny77]

Damn I hate it when program traders use algorithms that feed off each other and create an endless negative feedback loop.

Kinda like Shimano vs. Campy vs. SRAM thread.

[Louis]

Originally Posted by 54ny77

Damn I hate it when program traders use algorithms that feed off each other and create an endless negative feedback loop.

Kinda like Shimano vs. Campy vs. SRAM thread.

What about Simplex and Suntour?

[54ny77]

Those are the equities in Dallas of bike parts.

Originally Posted by Louis

What about Simplex and Suntour?

[rounder]

We need someone like 1Centaur to explain all this stuff, at a time like this.

[Tickdoc]

Everybody calm down. I’m about to finish my Florida vacation and then everything will go back to normal.

[Louis]

Originally Posted by Tickdoc

Everybody calm down. I’m about to finish my Florida vacation and then everything will go back to normal.

While on vacation you stopped buying, so the market came crashing down?

[1centaur]

Originally Posted by rounder

We need someone like 1Centaur to explain all this stuff, at a time like this.

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.

[joosttx]

Originally Posted by 1centaur

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.

Completely disagree. The world has decided that the world is healed from 2008-9 and those policies that caused it to heal plus a few news ones have made it too hot. Therefore, the market needs to cool down and policies will be put in place to slow it which lessens the $$$ in the future.

I still believe in the efficient market hypothesis

[Gummee]

Originally Posted by djdj

No, we strong-kneed types will stay off the couch and ride the market all the way to the bottom! Who's with me!?!

Stocks are on sale. Buy em if you can

M

[Louis]

Originally Posted by Gummee

Stocks are on sale. Buy em if you can

Doesn't appear to be much of a discount to me.

[Tony T]

Originally Posted by Gummee

Stocks are on sale. Buy em if you can

M

If you liked today's Sale, you'll love tomorrow's.
DOW Futures indicate a 1,200 point drop at the open.

[Louis]

Originally Posted by Tony T

If you liked today's Sale, you'll love tomorrow's.
DOW Futures indicate a 1,200 point drop at the open.

If that does happen, it will certainly be irrational negativity (to invert Alan Greenspan's famous phrase).

[Tony T]

Bitcoin just fell below 6,000