4 ms·

How is 2% even news? Doesn't that happen all the time? I bet it rebounds tomorrow.

cheschire 5y ago
It happens on or about this time most years it seems. Humans seem incapable of basic pattern recognition when it comes to money. My guess is this sort of article is designed to cause amateurs to run away, feeding short positions and bringing some stocks down to improve profits on specific purchases. Sure there are underlying one off events occurring that spark these things but the reactions are typically outsized at specific times of the year
dillondoyle 5y ago
Was already below 50 day moving average a few days ago probably more now. Half way to a correction. Seems like we've been up and up and up for so long people are surprised! Though today's news take is on Evergrand a Chinese company be the cause. Which I believe is one of the biggest holders of loan debt in China. It seems like news reports CCP will not bail them out. So if you believe the big rally we've had is built on risky credit and 'free' credit extended by governments that will come home to roost, then it could be a scary sign. But from what I've read China is somewhat unique in there small scale individual loaning with historically low compliance & reserves for banks, seems the government is trying to reign that in. Protect their power & what they view as best for their economy in the long run, at expense of short term correction. https://www.marketwatch.com/story/sp-500-perilously-close-to-a-breach-below-its-50-day-moving-average-as-stock-market-slumps-friday-2021-09-17 https://www.marketwatch.com/story/sp-500-perilously-close-to...
csours 5y ago
Is X a lot is a good question in general. It helps to have some numbers to anchor on - the first whole market circuit breaker is at 7%, or 5% for one security (ticker symbol) https://www.investopedia.com/terms/c/circuitbreaker.asp https://www.investopedia.com/terms/c/circuitbreaker.asp
baq 5y ago
That’s the point - it doesn’t.
- dragontamer 5y ago
  Did you forget about all the wall street falls stories from the year 2020? 2% isn't really a story. VIX is under 30 right now. There's nothing crazy going on in terms of volatility yet. Maybe tomorrow things will be bad but... lets not go chasing after scary stories yet. I think if VIX spikes to 100 (as it has in the past: when crisis start to happen), then we can talk. But for now, its premature to cast any doom or gloom about this situation.
  - Kiro 5y ago
    The reason for the this downturn is what's newsworthy. We're potentially witnessing another Lehman Brothers moment.
    - dragontamer 5y ago
      Then link and/or discuss the newsworthy event, not the market movement. If you think the Chinese loan company is going to be a problem, feel free to discuss that as the core topic. But looking at the US stock market when the Chinese Bond market is erupting is a bit of a non-sequitur, don't you think? Given the low value of VIX, the US investors seem rather calm about the event right now. It is news if VIX spikes, as options are bought when investors are scared. But 2% movements and under 30 VIX is rather ordinary, as far as US stock markets go.
    - baq 5y ago
      the more likely reason is a large fund rolling their puts which causes forced liquidations for highly leveraged market participants. it's been doing this for years and is one of the reasons for consistent turmoil in the market every september (and march - it is a bi-annual event)
  - themodelplumber 5y ago
    SPY shows a nice weekly gap in the low 400s. I wonder if we work down to that on a wick and then try for new highs again around EOY. VIX is not looking very interesting mid term.
mikestew 5y ago
If by "all the time" you mean "every couple of quarters", you might be right: "The Nasdaq Composite (.IXIC) was down 396.26 points, or 2.63%, at 14,647.71, set for its worst day since May 12." But by my measurement, no, 2% is a really bad day. The 2% isn't the news anyway, it's the "why" that's the news, and that is left as an exercise for the reader.
- ortusdux 5y ago
  I think the 2020 crash is fresh in everyone's memory: https://en.wikipedia.org/wiki/List_of_largest_daily_changes_in_the_S%26P_500_Index https://en.wikipedia.org/wiki/List_of_largest_daily_changes_... Date % Change 2020-10-28 −3.53 2020-09-03 −3.5 2020-06-11 −5.89 2020-03-20 −4.34 2020-03-18 −5.18 2020-03-16 −11.98 2020-03-12 −9.51 2020-03-11 −4.89 2020-03-09 −7.60 2020-03-05 −3.39 2020-02-27 −4.42 2020-02-25 −3.03 2020-02-24 −3.35
  - id 5y ago
    All of those have been very good days to buy.
  - mikestew 5y ago
    I consider 2020 to be an outlier of volatility. You might consider otherwise. But if I must make qualifications to my answer to "doesn't it happen all the time?", then it would be "if you consider only 2020, then yes. Otherwise, no, it is not common".
    - ortusdux 5y ago
      No, I agree. 2020 was disruptive in so many ways. My concern is what happens when an increasing number of people think that a 2% dip is normal to the point of not being newsworthy.
      - mikestew 5y ago
        Ah, I get ya now. Thanks for the clarification. And, yeah, normalizing one-day drops of 2% is a bit of a disturbing thought. :)
naiwenwt 5y ago
If you're confident that it rebounds tomorrow, you should be buying.
- TheDudeMan 5y ago
  I did buy the dip. But I don't need it to rebound tomorrow.
programmarchy 5y ago
Perhaps the bigger story is Evergrande, which is shaping up to be Lehman 2.0 in China. There is a lot of uncertainty about how the CCP will respond, and what the cascading effects will be on the global economy.
ghoulsss 5y ago
Overreaction to the impending evergrande default tomorrow where they will likely fail to pay interest. The implosion will be mostly contained within China. Sure there will be some margin call around the world, but again, contained in china.
anm89 5y ago
2% single direction days are still outliers in mature markets at the index level.

It happens on or about this time most years it seems. Humans seem incapable of basic pattern recognition when it comes to money. My guess is this sort of article is designed to cause amateurs to run away, feeding short positions and bringing some stocks down to improve profits on specific purchases. Sure there are underlying one off events occurring that spark these things but the reactions are typically outsized at specific times of the year

dillondoyle 5y ago

Was already below 50 day moving average a few days ago probably more now. Half way to a correction. Seems like we've been up and up and up for so long people are surprised! Though today's news take is on Evergrand a Chinese company be the cause. Which I believe is one of the biggest holders of loan debt in China. It seems like news reports CCP will not bail them out. So if you believe the big rally we've had is built on risky credit and 'free' credit extended by governments that will come home to roost, then it could be a scary sign. But from what I've read China is somewhat unique in there small scale individual loaning with historically low compliance & reserves for banks, seems the government is trying to reign that in. Protect their power & what they view as best for their economy in the long run, at expense of short term correction. https://www.marketwatch.com/story/sp-500-perilously-close-to-a-breach-below-its-50-day-moving-average-as-stock-market-slumps-friday-2021-09-17 https://www.marketwatch.com/story/sp-500-perilously-close-to...

csours 5y ago

Is X a lot is a good question in general. It helps to have some numbers to anchor on - the first whole market circuit breaker is at 7%, or 5% for one security (ticker symbol) https://www.investopedia.com/terms/c/circuitbreaker.asp https://www.investopedia.com/terms/c/circuitbreaker.asp

baq 5y ago

That’s the point - it doesn’t.

dragontamer 5y ago
Did you forget about all the wall street falls stories from the year 2020? 2% isn't really a story. VIX is under 30 right now. There's nothing crazy going on in terms of volatility yet. Maybe tomorrow things will be bad but... lets not go chasing after scary stories yet. I think if VIX spikes to 100 (as it has in the past: when crisis start to happen), then we can talk. But for now, its premature to cast any doom or gloom about this situation.
- Kiro 5y ago
  The reason for the this downturn is what's newsworthy. We're potentially witnessing another Lehman Brothers moment.
  - dragontamer 5y ago
    Then link and/or discuss the newsworthy event, not the market movement. If you think the Chinese loan company is going to be a problem, feel free to discuss that as the core topic. But looking at the US stock market when the Chinese Bond market is erupting is a bit of a non-sequitur, don't you think? Given the low value of VIX, the US investors seem rather calm about the event right now. It is news if VIX spikes, as options are bought when investors are scared. But 2% movements and under 30 VIX is rather ordinary, as far as US stock markets go.
  - baq 5y ago
    the more likely reason is a large fund rolling their puts which causes forced liquidations for highly leveraged market participants. it's been doing this for years and is one of the reasons for consistent turmoil in the market every september (and march - it is a bi-annual event)
- themodelplumber 5y ago
  SPY shows a nice weekly gap in the low 400s. I wonder if we work down to that on a wick and then try for new highs again around EOY. VIX is not looking very interesting mid term.

mikestew 5y ago

If by "all the time" you mean "every couple of quarters", you might be right: "The Nasdaq Composite (.IXIC) was down 396.26 points, or 2.63%, at 14,647.71, set for its worst day since May 12." But by my measurement, no, 2% is a really bad day. The 2% isn't the news anyway, it's the "why" that's the news, and that is left as an exercise for the reader.

ortusdux 5y ago
I think the 2020 crash is fresh in everyone's memory: https://en.wikipedia.org/wiki/List_of_largest_daily_changes_in_the_S%26P_500_Index https://en.wikipedia.org/wiki/List_of_largest_daily_changes_... Date % Change 2020-10-28 −3.53 2020-09-03 −3.5 2020-06-11 −5.89 2020-03-20 −4.34 2020-03-18 −5.18 2020-03-16 −11.98 2020-03-12 −9.51 2020-03-11 −4.89 2020-03-09 −7.60 2020-03-05 −3.39 2020-02-27 −4.42 2020-02-25 −3.03 2020-02-24 −3.35
- id 5y ago
  All of those have been very good days to buy.
- mikestew 5y ago
  I consider 2020 to be an outlier of volatility. You might consider otherwise. But if I must make qualifications to my answer to "doesn't it happen all the time?", then it would be "if you consider only 2020, then yes. Otherwise, no, it is not common".
  - ortusdux 5y ago
    No, I agree. 2020 was disruptive in so many ways. My concern is what happens when an increasing number of people think that a 2% dip is normal to the point of not being newsworthy.
    - mikestew 5y ago
      Ah, I get ya now. Thanks for the clarification. And, yeah, normalizing one-day drops of 2% is a bit of a disturbing thought. :)

naiwenwt 5y ago

If you're confident that it rebounds tomorrow, you should be buying.

TheDudeMan 5y ago
I did buy the dip. But I don't need it to rebound tomorrow.

programmarchy 5y ago

Perhaps the bigger story is Evergrande, which is shaping up to be Lehman 2.0 in China. There is a lot of uncertainty about how the CCP will respond, and what the cascading effects will be on the global economy.

ghoulsss 5y ago

Overreaction to the impending evergrande default tomorrow where they will likely fail to pay interest. The implosion will be mostly contained within China. Sure there will be some margin call around the world, but again, contained in china.

anm89 5y ago

2% single direction days are still outliers in mature markets at the index level.