The Novice Bear

With crazy days like today I am reminded of a paper I read recently where a group studied the price fluctuations leading up to the market crash of 87. They found that abnormal volatility on the 10 minute scale increased to a critical value just before the crash. The paper was published in the top physics journal, Physical Review Letters. Perhaps the most interesting aspect of the paper is that they found a connection between the math that describes a market crash and the math that describes a phase transition (i.g. a solid that melts into liquid).

It doesn’t get more volatile than today!

Not much to say here except that the percentage of stocks 2 standard deviations below their 200 dma keeps growing. It still looks like the big boys are holding the market up.

I don’t have a subscription to Real Money anymore, but I do like to check in from time to time and just read the blog titles. Jim Cramer had a classic yesterday. He always seems to find some conspiracy to explain away any market downturn and this time it was the futures and ETFs that were driving down prices. His explanation? There is no up-tick rule so money managers can push the broader markets down more easily.

There is only one problem with that hypothesis, namely that the uptick rule was ruled obsolete and was eliminated by the SEC this last June. Good one Jim.