For the polyannas out there who think it will all be ok....
We could conceivably undercut the closing lows from 02 and bounce, but the odds do not favor this. Instead, the odds favor massive forced selling showing up at that point.
We are severely oversold on virtually all indicators.
This has both a good and bad side.
The good side is that it is a coiled spring and can produce a hell of a bounce in the market if something is done that imparts confidence.
The bad side is that from severe, deeply oversold conditions you also get crashes. If what little confidence is left disappears for any reason, so will the floor. It could be literally something as simple as one imprudent sentence out of a lawmaker or Administration Official's mouth.
On the internals I do not see the sort of protection buying (PUTs) that would cushion a fall. This is especially true in the Nasdaq 100 today, where people are actually buying calls into this decline.
The paradox of this situation is that if a waterfall decline begins there is nothing to stop it, because investors who hold stocks long have bought little protection against it - all they can do is sell, which further stokes the decline itself. (If you hold a PUT you are protected against any decline below the strike.)
There are also indications that Europe is in extremely serious trouble; the Pound in particular is deteriorating this afternoon. I have no news on the wire beyond what was known last night to explain that move, but its big - nearly two full cents, or about 1-1/2%, in the last six hours.
I'll go over this in more detail this afternoon on the BlogTalkRadio show at 3:30 Central this afternoon; tune in.....
In the meantime you may want some better protection than that umbrella above.
Where We Are, Where We're Heading (2013) - The annual 2013 Ticker
The content on this site is provided without any warranty, express or implied. All opinions expressed on this site are those of the author and may contain errors or omissions.
NO MATERIAL HERE CONSTITUTES "INVESTMENT ADVICE" NOR IS IT A RECOMMENDATION TO BUY OR SELL ANY FINANCIAL INSTRUMENT, INCLUDING BUT NOT LIMITED TO STOCKS, OPTIONS, BONDS OR FUTURES.
The author may have a position in any company or security mentioned herein. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.
Looking for "The Best of Market Ticker"? Check out Ticker Classics.
Market charts, when present, used with permission of TD Ameritrade/ThinkOrSwim Inc. Neither TD Ameritrade or ThinkOrSwim have reviewed, approved or disapproved any content herein.
Market Ticker content may be reproduced or excerpted online provided full attribution is given and the original article source is linked to. Please contact Karl Denninger for reprint permission in other media.
Submissions may be sent "over the transom" to The Editor at any time. To be considered for publication your submission must include full and correct contact information and be related to an economic or political matter of the day. All submissions become the property of The Market Ticker.
Leads on stories of current economic and political interest are always welcome. Our fax tip line is 850-897-9364; please include contact information with your transmission.