Oppenheimer on Thursday’s Action

Oppenheimer’s Chief  Market Technician, C. B. Worth, had this to say about last Thursday’s nasty action.  All emphasis is mine.

The first thing to be said is that crashes do not come out of nowhere (and everybody knows it).

Crashes come when too many stocks are “Vulnerable-Extended.” Crashes come from complacency. Crashes come from consensus thinking. Crashes come from hubris. 

The second thing to be said is that “unidentified, unknown, inexplicable, and mysterious” computerscomputer programs, computer programmers, or computer operators, are never the reason a market crashes.

A market crashes on a particular day when it has been weak for several preceding sessions, is especially weak on the day in question, and when at some point… intra-session on the day of the event… it gets so very weak that buyers disappear, literally… and sellers panic. “Get me out!”

And, lastly:

Now that we’ve crashed, there are virtually no “Vulnerable-Extended” Sells in the market. This is a positive. Complacency and hubris have been expunged.

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