Please Assume Crash Positions
- Please Assume Crash Positions
by CHARLES HUGH SMITH, http://charleshughsmith.blogspot.com/
That few believe Mr. Market can possibly stumble only increases the odds of a stumble.
Very few punters expect a real downturn here in stocks. The reasons for confidence are many: the Fed has our back, buy the dip has worked great and will continue to work great, the Fed won’t raise rates until December (if ever), the Powers That Be will keep the market aloft lest a plunging market upset the election of the status quo candidate, and so on.
This confidence that the market will be on cruise control into the November post-election rally is the ideal set-up for a crash to SPX 1,850. While we can argue technicals all day, the fact is gaps get filled, usually sooner rather than later. There are two big open gaps in the S&P 500 around 2.040 and 1,860 that have been begging to get filled for months.
The question arises: after months of going unfilled, why not fill them now with a pleasantly unexpected little October crash? Technically, there are a couple of features that suggest the market would really, really like to plummet, if only the Plunge Protection Team would stand aside for a few days.
The cliff and the gaps both beckon. That few believe Mr. Market can possibly stumble only increases the odds of a stumble. Hubris eventually has consequences.
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