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Art Cashin Compares This Week's Action To The Days Before Black Friday

Tyler Durden's picture




 

Yesterday's ominous selloff (today's very temporary EURUSD, and 100% cross-asset correlation, bounce notwithstanding: after all the data just got even worse courtesy of the Philly Fed, meaning much more pain for the S&P before QE 3 comes) got you a little jittery, with Flash Crashy overtones? You are not alone. Market veteran Art Cashin recounts that yesterday's market action was not so much reminiscent of 2010, or even the 2008 uber-volatile market, but really 1987.

Some Echoes of 2008 (And One, Faint, Slightly Scarier Echo) – (For those of you who listen to me throughout the day on the UBS squawkbox this may be a little “old news” – but hang in there.)

The stock market got hammered by a one-two punch yesterday. Actually, it was more like a one-two-three punch.

Early on, stock futures were in the hole as the Euro sagged on the breakup of the emergency Greek rescue meeting late Tuesday and signs of new unrest in the Athens streets.

Then, into that weakened and nervous environment, strode a series of lousy economic stats in the U.S. At 8:30, the CPI was a notch high which might be a hindrance to further Fed easing. Worse, and far more shocking, the NY (Empire) Fed Index imploded to -7.8% from +12. It had been expected to come in at +12. The plunge sent the already weak equity futures reeling.

At 9:15, Industrial Production came in weaker than estimates and Capacity Utilization actually fell, reinforcing the suggestion that the economy was stalling.

The Dow opened down about 100 points and the bulls immediately began to circle the wagons. They trimmed the losses slightly but were unable to mount a credible rally. Then, around 11:30, things began to unravel with a vengeance. There were confusing (and occasionally conflicting) headlines about the actions and intentions of the Greek PM, Mr. Papandreou. Had he been asked to resign? Did he say he would? Did he say he wouldn’t? Would there be a “unity government?” As a backdrop to all this, TV screens filled up with the likes of smoke canisters, riot batons and rock throwing mobs in Athens.

What really broke the back of the Euro and the markets (we think) were reports of a “leaked” EU email about the breakup of Tuesday’s rescue mission. It was said to have a very pessimistic tone and cast doubt on an effective ultimate rescue. As stocks and oil and grains got pounded, some folks heard echoes of 2008. Some TV pundits saw similarities to Lehman in September. Most traders, however, saw things more analogous to March and Bear Stearns. The rumormongers had begun to shift the discussion from European banks to the unknown counterparties on European Credit Default Swaps.

That universe is potentially enormous, populated as Captain Renault might say – by the usual suspects. That clearly runs the risk of some 2008 potential.

By the closing bell, the ugliness had not lifted. The breadth was negative and outright atrocious. It was a “90% down day” and, we think, the third or fourth in this selloff. It not only erased all of the gains of the prior two days, it took us to new lows for this down leg.

At the post close seminar of the Friends of Fermentation, the chatter about the echoes of 2008 grew a bit louder and more animated. A few of the geriatric veterans were a bit more somber and reflective.

They recalled another volatile expiration week that followed a growingly aggressive selloff from a high only weeks before. That was not 2008. It was 1987. But that’s so unlikely, right? Pass the peanuts, please!

 

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Thu, 06/16/2011 - 13:27 | 1375049 eureka
eureka's picture

From Art's mouth to God's ear.

Thu, 06/16/2011 - 13:28 | 1375075 risk-reward
risk-reward's picture

Only one ear?

Thu, 06/16/2011 - 14:17 | 1375226 anynonmous
anynonmous's picture

ah yes Black Friday and the crash of 87 and everyone's favorite pundit of the day Louis Rukeyser with his pals Marty Zweig and Allen Sinai

Black Friday edition of Wall Street Week in its entirety

http://www.youtube.com/watch?v=2MyToTwag34

http://www.youtube.com/watch?v=h9iE-bn0xBU

http://www.youtube.com/watch?v=o7_l5ijG0bg

Thu, 06/16/2011 - 15:09 | 1375439 SwingForce
SwingForce's picture

WOW! His face was really green on my TV that night, don't adjust that set! Oh yeah, get that Kojak Lollypop ready, because who loves you, baby! Nice post, thanx for the mammories[sp] but wasn't Black Friday on a Monday that year?.

Thu, 06/16/2011 - 15:28 | 1375482 anynonmous
anynonmous's picture

Marty and Sinai were pretty prescient that night follow the links for Black Monday and beyond and you'll get to see your buddy Cavuto and even a cameo by a youthful Kudlow

http://www.youtube.com/user/crashof1987#p/u/5/4pjSlIkNxXg

and in this report a week later what in hindsight is perhaps  the birth of the current generation of  banksters as the push for deregulation goes full speed ahead (including a cameo by the Late Bill Seidman)

http://www.youtube.com/watch?v=cnAz3lCQ04k

Thu, 06/16/2011 - 22:07 | 1376444 S-hai High
S-hai High's picture

Awesome! Thanks for posting...

Rukeyser: “These computers are used by large institutional investors, whose money managers are paid huge sums of money, to make no-brain decisions that are made for them by computers. Aren’t these guys overpaid?”

 

Thu, 06/16/2011 - 13:30 | 1375068 qussl3
qussl3's picture

Cant happen, circuit breakers.

 

Thu, 06/16/2011 - 13:37 | 1375112 Alcoholic Nativ...
Alcoholic Native American's picture

Yep

Thu, 06/16/2011 - 13:46 | 1375128 qussl3
qussl3's picture

The chaos will be everywhere else tho, gonna be fucking funny when stawks dont trade for a week then open down 30%.

Thu, 06/16/2011 - 13:49 | 1375143 SheepDog-One
SheepDog-One's picture

Yep, I'm guessing what we'll see next wont be some smooth comfortable patch job, but a sudden chaos event.

Thu, 06/16/2011 - 15:43 | 1375609 tiger7905
tiger7905's picture

Jim Sinclair seems to be echoing the same thoughts...

http://goldandsilverlinings.com/?p=1244

Thu, 06/16/2011 - 14:07 | 1375163 Dr. Engali
Dr. Engali's picture

They didn't think it could happen in 1987 either. Remember portfolio insurance? Everybody had it. There is always something that can trash the system. Flash crash, a robot blows up, who knows. They said the Titanic was unsinkable. We all know what happened there.

Thu, 06/16/2011 - 14:09 | 1375206 mr. mirbach
mr. mirbach's picture

Even with circuit breakers a 30% one day drop is possible. 

 

http://www.nyse.com/press/circuit_breakers.html

Thu, 06/16/2011 - 14:40 | 1375336 qussl3
qussl3's picture

You'd think they'll be able to switch all algos to buy in the half hour breaks no?

Thu, 06/16/2011 - 14:30 | 1375300 Ergo
Ergo's picture

and the "plunge protection" team

but who knows what game theory can do to the robots.  untested waters now.

Thu, 06/16/2011 - 13:27 | 1375070 Hugh G Rection
Hugh G Rection's picture

2k shaving in one week, then QE3

Thu, 06/16/2011 - 13:33 | 1375086 baby_BLYTHE
baby_BLYTHE's picture

except it won't be called QE3.

It will be called "Cupcakes" according to Jim Rogers

Thu, 06/16/2011 - 13:39 | 1375118 SheepDog-One
SheepDog-One's picture

Great, plunge the markets down (I dont believe they can) and then 'QE3'....go for it Ben I really want to see my gold at $2,000 overnite.

Thu, 06/16/2011 - 13:31 | 1375078 Cognitive Dissonance
Cognitive Dissonance's picture

I was only 3 months in 'da bidness' when the '87 crash happened. What a rookie hazing that was. What doesn't kill ya........

Thu, 06/16/2011 - 15:25 | 1375362 SwingForce
SwingForce's picture

Ha ha, my boss walks out of the men's room with his necktie thrown up around his shoulder, his eyes were all red and watery. I went inside there was vomit everywhere, what a day! Bobby P. got all my guys out, what can I say. Here check the reprints from this book, great pics of Boesky & Guiliani too: https://picasaweb.google.com/larryokarski/TheMissilesOfOctober 

PPT was born 10/20/1987 XMI Futures on CBOT saved the world! C2XMZ if I remember correctly... and Oh yeah, Larry Wachtel said on the speakerbox, "Things must be getting bad, I just PUKED!" Smithtown did too, ha ha. (This was a Monday, not a Friday).

Thu, 06/16/2011 - 21:23 | 1376364 alex_g
alex_g's picture

I was 7 months into Goldman when the '87 crash hit...surreal market action...feels nothing like it.  Rates are half, PE's are lower, this is a different issue.  Worldwide debt exposure is off the charts compared to '87, and that, this time, is the catalyst.

Thu, 06/16/2011 - 13:30 | 1375085 Cassandra Syndrome
Cassandra Syndrome's picture

A 2,500+ drop in the Dow? There wasn't a PPT back in 1987, but certainly possible over the course of a week, in the absence of the Fed.

Thu, 06/16/2011 - 13:34 | 1375087 The Axe
The Axe's picture

Actually I had a drink with Art at Ben and Bensons that Friday before the crash..actually 4 drinks...I think he has a point....ha ha  I was the AXE in Genetech symbol GENE   and the stock was in a crossed market on Monday for 5 hours....it was the wild west baby.....sweet

Thu, 06/16/2011 - 22:06 | 1376370 tom a taxpayer
tom a taxpayer's picture

Was it the practice to flee Wall Street for mid-town steakhouse on Friday? Did you all take the subway, bus, taxi, or ? to 52nd street? 

P.S. I hope someday I can have a drink with Art.

http://www.benbensons.com/index2.htm

Thu, 06/16/2011 - 13:35 | 1375090 kito
kito's picture

1987 was the start of the bull market, glad to see you are so optimistic tyler. but i think you are rushing it just a bit.

Thu, 06/16/2011 - 13:32 | 1375097 baby_BLYTHE
baby_BLYTHE's picture

By "Bull Market", are you reffering to the millions of manufacturing jobs we lost to China during that period of time?

Thu, 06/16/2011 - 13:50 | 1375160 kito
kito's picture

talking strictly stock index numbers, not trying to get philosophical

Thu, 06/16/2011 - 13:54 | 1375169 baby_BLYTHE
baby_BLYTHE's picture

stock index numbers meaningless in real terms.

Greenspan slit the curreny's throat during this time.

Thu, 06/16/2011 - 14:20 | 1375243 kito
kito's picture

well if they are meaningless on the way up, surely they would be meaningless on the way down. and if that were the case, why such attention to it?

Thu, 06/16/2011 - 23:00 | 1376568 unununium
unununium's picture

Funny man, you make me wanna roll my IRA over to you at Edward Jones so you can fix my asset allocation for me.

Thu, 06/16/2011 - 13:43 | 1375122 gerd
gerd's picture

try again dum dum.  bull started in early 80s.

didn't really get going until we were able to fashion GDP out of debt.  Can't do that anymore and that's the difference.

Thu, 06/16/2011 - 13:44 | 1375136 kito
kito's picture

if you spelled "dumb dumb" correctly you might have some credibility

Thu, 06/16/2011 - 13:50 | 1375144 SheepDog-One
SheepDog-One's picture

No he's right and you're wrong, go buy some Dum Dum suckers and see for yourself.

Thu, 06/16/2011 - 14:08 | 1375214 kito
kito's picture

oh the pops, staple food of all white trash households

Thu, 06/16/2011 - 14:32 | 1375319 The Profit Prophet
The Profit Prophet's picture

A fool and their money are soon parted....say goodbye to your paper wealth Shill Boy.

T.E.I.N. everyone.

Thu, 06/16/2011 - 16:16 | 1375685 Vic Vinegar
Vic Vinegar's picture

You may not like it but paper wealth is going to be around for quite a while.

Thu, 06/16/2011 - 15:01 | 1375422 francis_sawyer
francis_sawyer's picture

It's what "Kazoo" used to call Fred Flintstone... But since Fred isn't around...

Thu, 06/16/2011 - 14:00 | 1375176 Dr. Engali
Dr. Engali's picture

Back then we were just starting to lever up as a country. That is no longer an option. We are in debt destruction mode now. The Dow will go to 4000

Thu, 06/16/2011 - 20:39 | 1376296 BoeingSpaceliner797
BoeingSpaceliner797's picture

The bull market to which you are referring is generally considered to have begun in 1982, not 1987.

Thu, 06/16/2011 - 13:42 | 1375098 SwingForce
SwingForce's picture

A Lesson from 1987: Who did the traders screw? They screwed each other!  It wasn't the little guy holding the bag, it was the brokerage firms- EFHutton? Drexel-Burnham? Kidder-Peabody? A large swift move lower shakes out the little guys' stops, have we learnt nuthin' from history? There will never be a TARP II, so Jamie & Lloyd better be careful this time.

On the other hand, God Bless Art and his trader's gut, there aren't too many like him around anymore- I'm thinking of Larry Wachtel as another example.

Thu, 06/16/2011 - 13:57 | 1375167 Arius
Arius's picture

so Jamie & Lloyd "better be careful this time."

They got their loot already...did you see their compensation for last year??? they know what is coming...but, hey thanks for the warning...

Thu, 06/16/2011 - 13:37 | 1375099 Alcoholic Nativ...
Alcoholic Native American's picture

BULLSHIT, markets only crash when bailout legislation doesn't go through, and then like TARP it's voted on again the next day.

 

THE STOCK MARKET IS TOTAL FUCKING GARBAGE.

 

 

Thu, 06/16/2011 - 13:40 | 1375111 SheepDog-One
SheepDog-One's picture

Agreed. The markets are now just pure garbage, completely irrelevant to anything real world and stinking.

Thu, 06/16/2011 - 13:59 | 1375173 Arius
Arius's picture

where is hammy when you need him???

any bulls out there?

they need volunteers to hold the bag...

Thu, 06/16/2011 - 15:10 | 1375477 r101958
r101958's picture

Bernank might call it a 'perception tool'.

Thu, 06/16/2011 - 15:23 | 1375517 Steaming_Wookie_Doo
Steaming_Wookie_Doo's picture

When it comes to Bernanke, it's a perception stool.

Thu, 06/16/2011 - 13:34 | 1375102 Beatscape
Beatscape's picture

Market breadth yesterday was the worst since 2008.  Advice from a guy with pointy ears: You do not want to be long equities right now.  I am 100% short.

Thu, 06/16/2011 - 14:11 | 1375213 Liquid Courage
Liquid Courage's picture

Likewise. Could be a major change in trend occurring: from Bull (fully rigged) to Bear (need justification for further rigging). If so, a strategic change from BTFD to STFB is in order. Care to compute the probability - based on your cold calculus -  that such a trend change has indeed occurred, Mr. Spock?

Thu, 06/16/2011 - 14:29 | 1375301 Beatscape
Beatscape's picture

Precisely.  A shift in market momentum does indeed seem to be occurring now.  One indicator that gives us evidence is the slow stochastics of the S&P 500. Every time this oscillator came down to 20, it was a BTFD moment.  But on this swoon, slow stochastics has dropped below 20, which hasn't happened in over 2 years. Further, it has been languishing under 20 since June 3--about 2 weeks, which hasn't occurred since 2008.  This is the start of the decline the bears have been looking for.

Thu, 06/16/2011 - 14:50 | 1375396 Liquid Courage
Liquid Courage's picture

Well, it feels that way to me as well, but better to leave feelings out of it, right? You express a 100% probability ... astounding! And encouraging, as I've actually been Selling The F'n Bounces since about March, even turned my nose up at some modest profits & am looking forward to getting some $ back at this point. At this point, I'm at least 100% certain this dip is of a higher degree than the last few. Thanks for the slo stoch numbers that confirm that feeling.

BTW, I used to do the Mr. Spock schtick back in the dot.com days on another board, in another galaxy far, far away. Can't believe how time flies, and how many suckers ... I mean "investors" can fall for the same crap time and again. Fear, Greed::Rinse, Repeat

Thu, 06/16/2011 - 15:31 | 1375558 Armando Javier ...
Armando Javier Finkeltein of the Boise Finkelsteins's picture

Someone needs to write a program that would give the definitions of all the acronymns on the left or right margins of text.

Thu, 06/16/2011 - 16:20 | 1375708 Liquid Courage
Liquid Courage's picture

Ya, sorry there Armando. I don't know if it's even been used before, but since the one most used here is Buy The F'n Dip (BTFD), I thought the context might be enough for its opposite: Sell The F'n Bounce (STFB).

See the post a couple down: TEIN has had me going for a while, but I think I may have just got it: The End Is Nigh (or Near).

Can I get a witness (CIGAW)?

Thu, 06/16/2011 - 15:40 | 1375598 Armando Javier ...
Armando Javier Finkeltein of the Boise Finkelsteins's picture

Someone needs to write a program that would give the definitions of all the acronymns on the left or right margins of text.

Thu, 06/16/2011 - 13:34 | 1375104 buzzsaw99
buzzsaw99's picture

Art talks like we have a real market. LOL

Thu, 06/16/2011 - 14:37 | 1375337 The Profit Prophet
The Profit Prophet's picture

Very true....very sad!

T.E.I.N. everyone!

Thu, 06/16/2011 - 13:35 | 1375106 SheepDog-One
SheepDog-One's picture

I compared market action of late to just prior to 'black friday' in an earlier article this morning.

Thu, 06/16/2011 - 13:41 | 1375114 Jason T
Jason T's picture

system is broken beyond repair.  Am growing own food and getting house toward a zero energy.  self sufficiency is important in the years ahead. 

Thu, 06/16/2011 - 13:47 | 1375132 SheepDog-One
SheepDog-One's picture

Its funny to watch isnt it? The system is totaly broken and corrupt beyond repair, and everyone is just placing guesses on how and when more duct tape and bubblegum will be applied for another 'fix'.  

Thu, 06/16/2011 - 22:17 | 1376457 i-dog
i-dog's picture

Yep. Typical socialists ... "just one more rule change", "just one more regulatory committee" and all will be fixed! Fucking morons are always looking for mommy to come and kiss it better.

(insert appropriate cartoon here)

Thu, 06/16/2011 - 13:43 | 1375119 tradewithdave
tradewithdave's picture

Is it possible that the market is feeling a bit out of shape and not as able to "Twist and Shout" as in previous decades. 

http://tradewithdave.com/?p=6968

Dave Harrison

www.tradewithdave.com

 

Thu, 06/16/2011 - 13:43 | 1375133 mynhair
mynhair's picture

So, under 1240 by close?

Thu, 06/16/2011 - 13:44 | 1375135 monopoly
monopoly's picture

Agree with the garbage thought.

I guess I too am getting old. I remember well the 87 crash and have been positioned for a safe fall over the cliff with a few shorts and lots of confetti until miners return to the forefront. What a crock of shit this market is.

0 longs except inverse ETF or two.

Thu, 06/16/2011 - 13:52 | 1375152 mynhair
mynhair's picture

Who woulda thought a Weiner resignation would so threaten the pig Market?

Thu, 06/16/2011 - 14:20 | 1375244 Arius
Arius's picture

aha...that was the reason...i couldnt figure it out what was going on...

Thu, 06/16/2011 - 13:56 | 1375164 AboutAverage
AboutAverage's picture

Baloney sandwithes!  If the markets drop, it is only because the rigged casino decided to fleece the 401k sheeple.  

I don't listen to funny papers, funny gooned owned news networks (including fake alternative media), or fake polls from the funny networks who attempt to tell me what reality is.  This is getting quite ridiculous at this point.   Every blogger is just pounding these goons into the sand with their garbage stories.  There is censorship on blogs like yahoo and they still can't stop it.   Simply amazing.  Welcome to the 21st century goons.      

Thu, 06/16/2011 - 14:04 | 1375187 SheepDog-One
SheepDog-One's picture

The 401K sheeple ARE the main next target for fleecing...hell over the last month theyve already raided federal employee pensions for $100 billion, it will be even quicker for the public pension and 401K heist coming next.

What do people think, Bernank did all this so geezers can retire like a millionaire at The Villages?

Dream on.

Thu, 06/16/2011 - 13:53 | 1375165 thetrader
thetrader's picture

not so fast, let's see more momos sucked into the long trade, before we collapse

Thu, 06/16/2011 - 14:40 | 1375359 The Profit Prophet
The Profit Prophet's picture

Clarification please...MOMOS??...momentum traders?

Thu, 06/16/2011 - 13:58 | 1375168 oogs66
oogs66's picture

I hope he is right!!!

Thu, 06/16/2011 - 14:01 | 1375183 Whatta
Whatta's picture

question for you market historian-types...

Why the heck does the government release economic data piecemeal throughout the month? Is that the way it has always been, or did the big trading houses lobby to get it that way so the market could be yanked up and down willy-nilly and generate more trading profits?

Wouldn't be more efficent, if not more volatile to release a months data all at once and "get 'er done"?

Thu, 06/16/2011 - 14:01 | 1375191 SheepDog-One
SheepDog-One's picture

So that theres always something coming with hours to keep people waiting for with baited breath.

Thu, 06/16/2011 - 14:04 | 1375188 mynhair
mynhair's picture

Still awaiting the Weiner.......

Thu, 06/16/2011 - 14:06 | 1375195 slewie the pi-rat
slewie the pi-rat's picture

going curmudgeonly OT (sorry, art). 

libya:  still bombs awaaayyy!  but i see where some congo-lese, led by the dastardly Ku-Ku-Kucinich, a group of House farts, is suing prez0: 

the suit will contest the Obama administration's "circumvention of Congress and its use of international organizations such as the United Nations and the North Atlantic Treaty Organization to authorise the use of military force abroad." (End Paste)

john boehner even sent a note  TO:  The Executive  FROM: The Speaker Of The House  about what the hell is going on, here?

yesterday, in NY, near the UN, louis farrakhan:  expressed support for Libyan leader Muammar Al Qathafi and condemned the NATO-led bombing of Libya, UN-sanctioned military strikes and operations against the North African nation.

Former U.S. Attorney General Ramsey Clark also addressed the press and called for an end to the strikes and the war on Libya. (End Paste/pastes from The Tripoli Post)

yes, we have ku-ku-, j-bone, theMin, & ram-C/xA.G., presented as voices of peace and reason, by slewie the pi-rat, on zeroHedge, and inviting enquiring minds everywhere to ask:  what the hell is going on, here?

Thu, 06/16/2011 - 14:12 | 1375221 Alcoholic Nativ...
Alcoholic Native American's picture

That Idiot faked fucking killing Osama, that's what we call dirt.  When you have dirt on someone that means you have power over them.   The puppet got a shit load more strings on May the 2nd 2011.

Thu, 06/16/2011 - 22:24 | 1376479 i-dog
i-dog's picture

Oh, they had ple-e-e-e-e-nty of dirt on the Big O (and his mum) long before May 2nd. He's on the inside and well protected (until he's not).

Thu, 06/16/2011 - 18:52 | 1376069 ebworthen
ebworthen's picture

Obama is solidifying the use of Executive powers to pursue military objectives under NATO guidance; and yes - what the hell is going on here?

Thu, 06/16/2011 - 14:04 | 1375203 mynhair
mynhair's picture

PPT better get on MON; they are a big dummo contributor.

Thu, 06/16/2011 - 14:08 | 1375204 P-K4
P-K4's picture

"...the actions and intentions of the Greek PM, Mr. Papandreou. Had he been asked to resign? Did he say he would? Did he say he wouldn’t?"

Such a dilemma deserves an appropriate tune;

http://www.youtube.com/watch?v=GqH21LEmfbQ

Could be Mr. Pap' asking Christine Lagarde the question "Should I Stay or Should I Go ?"

 

Thu, 06/16/2011 - 14:07 | 1375211 Johnny Lawrence
Johnny Lawrence's picture

AAPL through the 200-day for the first time in 2 years.

Thu, 06/16/2011 - 14:10 | 1375220 mynhair
mynhair's picture

Where is the Weiner?

In a ditch with 2 self-inflicted lead overdoses in the back of the head?

TWWW....

Thu, 06/16/2011 - 14:18 | 1375234 warchopper
warchopper's picture

Is it possible that the HFT algo's start driving the market down instead of up?

Thu, 06/16/2011 - 14:32 | 1375318 cougar_w
cougar_w's picture

Possible yes, even easy ... but why would The Bernank order such a thing? In the run up to elections?

There might be a reason, mind you. I'm not sure I'm devious enough to imagine it however.

Thu, 06/16/2011 - 14:24 | 1375269 Quinvarius
Quinvarius's picture

Every "pro" on the planet is now short.  I have not liked stocks for a long time.  But this is too obvious.  And going into OPEX, I would have to expect a sneak attack market pump.

Thu, 06/16/2011 - 14:29 | 1375298 cougar_w
cougar_w's picture

Along these same lines is this:

If all it takes to start a crash is a belief that current markets resemble past crash years like 1929 and 1987, then we may have crashes again in the future. Come October it has become a tradition to speculate about crashes in the press. Commentators have warned about the potential for a repeat of 1987 every fall through the late 1980s and 90s, possibly causing small mini crashes in October 1989 and 1997 (see my paper for these explanations). As we approach October, these sort of analogies will appear in the press, on the internet, and be circulated in the trading community. Though they are superficial, if they capture the imagination of enough participants, a self-fulfilling process will emerge resulting in some sort of large decline.

Found here:

http://www.lope.ca/markets/1987crash/

Crowd psychology fail? Why not. And remember, whoever can trade the decline can make money, too.

Thu, 06/16/2011 - 14:43 | 1375354 King_of_simpletons
King_of_simpletons's picture

Act surprised when it happens, guys. I mean the crash.

Thu, 06/16/2011 - 14:47 | 1375382 treasurefish
treasurefish's picture

JC!  FUK US PIIGS!

 

(I love the new acronym so much that I can't quit saying it!)

Thu, 06/16/2011 - 14:48 | 1375390 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

VIX lives! Who would have thunk it.

Thu, 06/16/2011 - 15:00 | 1375419 ihatecats
ihatecats's picture

please don't jump on my ignorance too quick.but IF a crash is constructed and IF a lot of people lose money and IF TPTB force you to take your money out of your401k,IRA etc.and pay zillions of tax dollars OR(to prove how much they love you) convert your retirement to US bonds,,,,,???how far down the road could that kick the slop jar?

Thu, 06/16/2011 - 18:27 | 1376003 Charles Wilson
Charles Wilson's picture

To Election Day:

Who said that TPTB are Monolithic? Get some Republicrat ("One of "Our People" this time) to overthrow Obama and we can still salvage Bidness as usual.  Cull the weak, impress upon the New People in Town that the best way to survive is to get along (Ummm...Could get a little messy...) and move on to the next item of business.

 

CW

Thu, 06/16/2011 - 19:00 | 1376081 ebworthen
ebworthen's picture

TPTB are making a killing already.

A lot of retired folks are being forced to liquidate assets they have held for a long time.

After the 2008 crash they had to take out what had the lowest capital gains.

Now, with continued 0% interest rates, no Social Security Cost Of Living Adjustment in 3 years, and increasing inflation they are getting hit with huge capital gains taxes for selling their longer term "more successful" investments.

Imagine that; save, invest in the the markets, and get punished for it.

What a country.

Thu, 06/16/2011 - 16:02 | 1375658 johnnyblade
johnnyblade's picture

Nice to see there are a few traders left on ZH.   

Thu, 06/16/2011 - 16:19 | 1375696 MallaKite
MallaKite's picture

....markets are setting the last bear trap in place. Wall streets gonna make a brutal last pop to Dow 14000 before  december expiry to roast and eat for dinner all the baby bear cubs.

Thu, 06/16/2011 - 18:51 | 1376075 ebworthen
ebworthen's picture

 

I remember that '87 crash, LOTS of regular folks lost their job over that one.

 

Thu, 06/16/2011 - 21:17 | 1376353 Buck Johnson
Buck Johnson's picture

I think that Michelle Caruso Cabrera (the other sweater girl) from Greece may have had it right.  The british anchor on CNBC kept trying to knock down what she said and from her expression she knew that he was putting out talking points about how Europe takes it time, how it is looking out to the next 1,000 years (seriously he said this) etc. etc..  She said that the ECB is playing this out in order to telegraph to the banks that do whatever you have to do to unwinde from all the debt and swaps associated with the Greek govt. and private companies.  She even said that if it takes them trying to sell this debt off to vulture funds then do it, but essentially they are saying we can't do anything and before we announce it GET OUT AS MUCH AS YOU CAN!

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