Random Analyst wrote: > Technically, most investors who follow the Dow Theory are still
> long the stock market. The same goes for technicians who use the
> S&P 500 Index 200-day moving average as a buy-sell level. On
> Friday, the S&P 500 closed just 3 points above its 200-day moving
> average of 2583, and just 5 points above its early-February low of
> 2581 (top of this page).
> It would be a mistake to ignore these looming technical
> sell-signals for a very simple reason: many traders, investors,
> and speculators follow these signals, and then act upon them when
> the signals are triggered. All it will take is one more day of
> moderate declines for several technical systems to reverse from
> bullish to bearish. And when that happens, considerable selling
> will develop from market-timers.
Higgenbotham wrote: > What happens next depends on how you think the market works
> nowadays. I see 3 possible outcomes:
> 1. The market is manipulated. The "gnomes" employed by the Fed use
> unlimited electronic cash to buy enough futures to hold the market
> above these levels.
> 2. The market is manipulated. The "gnomes" employed by the Fed
> make sure the market falls through these key levels so as to cause
> a mini panic, then step in (together with their fellow "Deep
> State" operatives like Goldman Sachs) to buy panicked investors
> holdings and quickly drive the market to a new all time high,
> making a tidy profit for the US government and the big banks and
> investment houses.
> 3. The markets are free and not manipulated. The markets go
> through the key technical averages and support levels and crash.
> Would you like Door Number 1, 2, or 3?
The Random Analyst quote supports the scenario I was describing last
week. The market peaked on September 3, 1929, and then started
falling gradually and continually, until there was a sharp panic on
October 28. The "one more day of moderate declines" could conceivably
be the trigger -- not for a crash, but for a panic.
The only differences between a "correction" and a "panic" are the size
of the fall and the public reaction. (Compare the public reaction to
last month's school shooting in Florida, versus other school
shootings. Saturday's march is the stuff of a panic.)
