Mini crashes might serve to stabilize things in the larger picture if they clean out accumulations of stop orders and discourage their use and the use of over-leveraging. I am not sure why nanex thinks every event like this is news - is there really evidence that they are more common, or is it just that they happen over a compressed time frame? Back when some of the electronic contacts were fairly new, one of the first strategies I used was to set scale limit orders below swing points since little stop runs were often not fully followed by the big contract and tended to reverse quickly.

Craig Mee writes: 

It reminds me of arm wrestling. If there is a stale mate on even ground, you can feign weakness quickly in order to hit the opponent with even greater force when he is not expecting it.


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