Yesterday's 800-point drop is starting to feel like a harbinger...not that massive swings haven't been the norm lately, but with the speed with which most of the sell-off occurred reminiscent of the fall of 2007's sharp, quick drops, we should take a look at the guilty market mechanism.
Here is an article explaining it:
https://www.zerohedge.com/news/2018-12-04/here-what-triggered-todays-sudden-stock-liquidation
Here is an excerpt from the above article:
"But while ongoing (relatively slow) risk parity deleveraging may explain the pressure on the market over the past month, the reason for the sharp waterfall in US stocks just after 12pm ET has to do with another systematic 'trader' type in the market: namely the much faster CTAs, or managed futures funds, which do nothing but chase market momentum once it has been established.
As McElligott writes in a follow-up note the Nomura CTA Trend model 'is again deleveraging massive notional in long US Equities expressions across SPX, RTY and NDX live.' This is more about performance and year-end timing than the curve inversion / 'growth scare' story…but that certainly is not helping the sentiment here either, as stops are being triggered across fundamental and rules-based strats.
More importantly, McElligott identifies the specific deleveraging 'trigger' behind the S&P waterfall liquidation, which was due to a massive CTA selling order, which was unleashed once deleveraging stops were hit in the S&P. Specifically, the SPX model was triggered to sell down at 2,763 - the S&P's 200DMA - with $32.8B notional for sale, reducing CTAs from '+100% Max Long' down to '+65% Long.'
One the selling program hit, it was lights out and the number of stocks that were sold off all at once, as measured by the NYSE Uptick-Downtick index, reached a negative 1,459, which was among the 10 worst readings of the year. Meanwhile, as Bloomberg's Andrew Cinko writes, the breadth of the S&P 500's decline sits at 88% currently, ranking it among the worst of the year, though remember that in February and April it was well north of 95%. So there's plenty of room for it to get uglier..."
Now, while 800 points no longer triggers the "flash crash" shut downs implemented by the money masters (which only comes into play after a 10% intra-day fall), the action for that hour around noon yesterday was certainly worrisome enough to suggest that this type of computerized action could be just the sort of thing that would finish off the bull run, PERMANENTLY, if it comes in tomorrow after today's bogus holiday (for some major swamp dweller's death.) The PTB could be getting ready to punch the reset button now that they have their crypto-world-currency all lined up...
Hold on to your hats tomorrow. This could be very verge-like.... The pent-up selling pressure from Tuesday afternoon has all day today to simmer and build. BE AWARE AND HAVE YOUR BUG OUT PLAN DUSTED OFF.