burt wrote:Just a remark: I don't remember the first panic you noted, and I cannot find it on any chart, can you help me to find it.
To find this panic, you will need a December 2009 futures chart because the panic started on the evening of November 25, 2009 after the markets closed for the Thanksgiving holiday. The panic continued until the futures markets closed for a few hours on Thanksgiving. When the futures market opened again on Thanksgiving evening, the panic continued. By the time the regular stock market opened the day after Thanksgiving, the panic had abated, so the full extent of the panic does not appear on any chart of a regular stock market index like the Dow Jones.
burt wrote:What is important today is "Is the bear market rally" a "bear market rally" and has it topped, any other question, for me is irrelevant, so don't panic (panic doesn't help to think).
Clearly, unless January 6 was the top, it hasn't topped. I think 99.9% of all people are assuming that they have 24 hour news, they have an Internet connection, and they can set stop loss orders to get out of longs or stop orders to place short positions that will be executed. The only thing I can say to that is if the panic comes and if some computers lock up as they did during the flash crash, and if some of the exchanges shut down and some don't as they did during the flash crash, and if the phones are jammed or the crash starts at night so nobody is answering the phone, and if the orders are lost in the system and nobody knows what did or didn't get executed or what the exchange may or may not cancel as also occurred during the flash crash, it's only then that those 99.9% will realize they were wrong. And they will panic and many will jump out of their skyscraper windows or commit suicide. Everyone thinks we saw the crash already, but I don't agree because the above hasn't happened yet to any great extent. And nobody knows for sure if it will happen or when it will happen or if the market has topped or when it will top, or what's relevant or what isn't relevant. We may have ideas, but that's about it.
One general guess I'd have is the longer the panic can be put off compared to previous cycles (like the 1930 Great Depression rebound), then the closer it will occur to the top and the faster it will occur. Another general guess I'd have is that looking at what most others are saying or doing as far as how to protect themselves in the event of a panic (for example, always place stop loss orders and you will be OK) will not work. Can you imagine how many stop loss orders will need to be hit all at once if everyone thinks the solution to protecting themselves is to stay long and have stop loss orders in? Who will be there to buy if there are very few limit buy orders to compensate?
The May flash crash occurred only 10 calendar days after the April high. If I had to guess, if the real crash comes, it might happen even less than 10 calendar days from the previous high. Since January 6 was the previous high, it might therefore occur before January 16. Oops, that would be this week, wouldn't it?