Monday, August 31, 2015

Markets can go down even in Oversold conditions

Well I have this to say about markets: they have become very oversold in the near term and medium term. Long term, if you look at this--say twenty years chart of the S&P--the recent decline hardly shows up, but it can get much worse. 

Let me remind your viewers that the day before the market crashed in October 1987, the market was also already oversold, and then the Dow dropped 21 percent in one day. So unusual things can happen when the goal of the authorities is to reduce some rift through central banking and monetary policies and fiscal policies. Then these depressed risks come back one day at the systemic rate, and this is what may happen now.

Updated: September 3, 2015