Jul

8

One way to think of sell-offs is as an attempt to locate and test fixed stops of different kinds. The BSC affair was one; when it was learned that a "too big to fail" failing financial (actually too big to let fail) was handled by the Fed and another financial. Similar tests occurred in January, in order to find out how much Ben cared about the stock market.

Both tests occurred around the level the SP500 is at now, and there could be attempts to bring it lower to find out what happens should other financials go under (eg, WM, WB, LEH ) - with or without government intervention. Or to bring in an "orthogonal" test of an asset related to other systemic problems, such as GM.


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