BarroMetrics Views: Are You Ready for 2017’s Tsunami?
I can feel it in the air; all the elements are coming together. I used to say: “It’s not a question of ‘if’, it’s a question of ‘when'”. Now I am saying: ” It’s not a question of ‘when’ but a question of ‘what’. What form will 2017 Bear Market take?
Will it be a grinding, small-moving affair? Or will see 1987 type flash crashes?
1987 is forever etched in my mind. Not because it marked the beginning of my journey as a successful trader, but because of memory of walking into the brokers office that night and asking, as I usually did,
“What’s the S&P doing tonight?”
The reply from an ashen-faced order filler was: “It’s down 20 points!”
I retorted: “You mean the Dow is down 20 points, don’t you?”
No, he said: “The S&P is down 20 points!!”
You have to remember, that the average range for the S&P for the prior 12 months was around 4 to 4.5 points. So the gap down that night represented a 500% increase in volatility! That’s not a night I’m ever going to forget.
Will the 2017 crash mirror 1987? I lean towards a ‘yes’ answer. I’ll consider my reasons in the blogs to follow.