Dow Jones Crashes Nearly 1200 Points In One Day - Loses 10% Since Market High

And this is what I have been warning about for the past year.  The market bubble is quickly turning into a market reversal and all those precious stock market gains in 2018 are evaporated in a puff of smoke and lost dreams.  As I have always said, stocks are a far trailing indicator of the health of the economy, NOT a predictive indicator.  Meaning, the fundamentals have been warning of a collapsing economy for quite some time, and only now are stocks finally reflecting this reality.  This is why a stock plunge of this magnitude was so predictable, and it is also why I believe it will continue throughout 2018.  Will this result in national crisis if such an implosion persists?  Not by itself, but combine major weakness in markets with a geopolitical disaster (like a war with North Korea) and yes, national crisis is inevitable.  Be sure to read my article coming out Wednesday on this issue for more in-depth analysis...

 

U.S. stocks plunged the most in 6 1/2 years, with the Dow Jones Industrial Average sinking more than 1,100 points, as the equity selloff reached a fever pitch amid rising concern that inflation will force interest rates higher. Treasuries rallied and gold rose on haven demand.

Volatility roared back into American equity markets, as the S&P 500 Index sank 4.1 percent to wipe out its January gain and turn lower on the year. The index capped its worst day since the U.S. lost its pristine credit rating, topping the rout that followed China’s shock devaluation of the yuan, the Brexit selloff and jitters heading into the presidential election. Trading volume was almost double the 30-day average. All but two stocks in the broad gauge declined.

“This is classic risk off that may not end any time soon,” says Win Thin, head of emerging-market currency strategy at Brown Brothers Harriman.

Selling accelerated shortly after 3 p.m. in New York, with the Dow sinking more than 800 points in a matter of 15 minutes only to snap back. The blue-chip index ended lower by 4.6 percent -- its steepest drop since August 2011, and is also lower for the year. The Cboe Volatility Index more than doubled to its highest level in 2 1/2 years.

 

READ MORE HERE:

https://www.bloomberg.com/news/articles/2018-02-04/asia-stocks-brace-for-selloff-bond-rout-deepens-markets-wrap

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Crash
written by Chris B , February 05, 2018

The beginning of the end. How the Asian markets do overnight and US markets tomorrow will be quite interesting.
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@ Crash
written by Avenue , February 06, 2018

Anything to add?
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Brandon Smith
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written by Brandon Smith , February 06, 2018

@Avenue

I would say that we should watch to see if a trend develops either way. Some of the largest stock bounces in history happened during greater equities crashes, like the crash of 1929 and the crash of 1987. Also keep in mind that VIX markets are still very much in panic mode, yet this somehow initiated a buying event, which is counter to logic. This means that I would not trust ANY stock bounce at this time to last very long.

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@Brandon
written by Avenue , February 06, 2018

As well as 2010, 2012 and 2016.
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Brandon Smith
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written by Brandon Smith , February 06, 2018

@Avenue

Not sure what you are referring to. If you are referring to the near-crashes in which the Fed quickly stepped in with stimulus injections to artificially prop up bad markets, then I would say this time that there is no indication they plan to do that. Without Fed fiat aid, markets will inevitably falter, as I have been predicting would happen to coincide with Fed rate increases and balance sheet reductions. Friday and Monday show this rather clearly with over 2000 points in losses in only 48 business hours. If nearly 10% of the Dow can be erased in just a few days, this calls into question the stability of the entire farcical bull market rally. The blind optimism is over.

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@Avenue
written by Chris B , February 06, 2018

Without any particular point being made it is hard to know where you are coming from or your intent. However, if you look at previous large crashes (larger than this one in percentage-wise) you will see that it is always preceded by much volatility and significant ups and downs (mostly downs) followed by a much larger crash. It stands to reason that it could play out the same here.
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