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Alert: Mini Stock Crashes Speak To Bigger Market Problem



October 22, 2013 – Comments (3)

Today, the stock market is higher once again but certain stocks have tumbled dramatically during market hours. In many cases, these drops were on epic intra-day volume and so fast they resembled the flash crash. Names like Netflix, Inc. (NASDAQ:NFLX), Facebook Inc (NASDAQ:FB) and LinkedIn Corp(NYSE:LNKD) are just some of these companies that experienced a massive mid morning collapse. While they have all bounced slightly, there is a bigger concern that is growing.

These flash crash type moves in stocks show us that a crash like 1987 is possible. The markets are up on hot air (aka the Federal Reserve money printing). Today for instance, Wall Street got the Non Farm Payrolls number. The number of created jobs was mediocre at best, if not weak. In addition, this number was calculated based on the numbers prior to the government shutdown. So the next Jobs number should be even weaker. The markets rallied higher because this again dictates that the Federal Reserve will continue printing money for far longer than originally expected.

The big concern to the intelligent investor must be how the market is continually moving higher on pure Federal Reserve intervention. Imagine if this market is shocked by something dramatically negative. A huge 1987 type crash could easily follow. A 20% drop in the stock market would basically just wipe out the gains from 2013. That is not out of this realm of possibility.

Lastly, I wanted to mention a few interesting dates in history that surround this mid-October period. Just three days ago, on October 19th, 1987 the market crashed. Tomorrow, on October 23rd, 1929, the stock market crashed. This period in history has been bumpy to say the least and with the mini flash crashes in stocks lately, with the market at all time highs, I would be very careful.

Gareth Soloway

3 Comments – Post Your Own

#1) On October 22, 2013 at 3:31 PM, awallejr (33.35) wrote:

Please stop with these impending crash blogs.  Your credibility is pretty much nil.  You have consistently and incorrectly been scaring people with these crash calls all year.  So your thesis is out of the history of the stock market 2 crashes occurred in October. You hurt people.

As for NFLX you can actually thank its CEO with his comments for the massive drop. But it is still trading well above when you told people to short the heck out of it.

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#2) On October 22, 2013 at 3:35 PM, awallejr (33.35) wrote:

And while corrections can always happen  I would expect one soon after all these new highs in which case I would advise people to buy the dip.  But the only chart you should have bothered with over the years is found here:

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#3) On November 14, 2013 at 5:12 PM, awallejr (33.35) wrote:

All time highs again.  No euphoria.

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