Has the long-awaited correction begun? Could it lead to a crash? I’m busy trying to make sense Of all this…

by Chris

I’m working away, gathering and scouting information, trying to figure out if “this is it.”

Has the long-awaited correction begun?  Could it lead to a crash (which I’ll define as an event so powerful that markets remain closed for more than two days in response)?

There are a lot of cross-currents to try and decipher.  Events are fast-moving.

Of note, “they” trotted out several tried and true rescue attempts today each of which failed.  One was jamming the stock futures (via premium reduction/inversion) and another was the old stand-by, never-fails, “China trade talks are back on the table!”

None lasted more than an hour.

That’s worth paying close attention to.

My personal moments of humor came when outfits like Bloomberg took advantage of each of these temporary bounces to try and spread calm.  Here’s one example:

Meanwhile, gold had a great day, probably telegraphed yesterday by the strength in the GDX.

I can only imagine that there’s a few really unfortunate trend-following hedge funds out there (or should I say “”hedge”” because they are anything but hedged) that had a perfectly bad strategy in place along the lines of:

  • Short gold
  • Short volatility
  • Long FAANGs

I’m sure this seemed like pure genius for a while, but now it’s been revealed to have been just dumb.  That’s okay, they still walk off with their past “2 and 20’s”.  They will now ruefully close their funds and live out a life of leisure and comfort having socked away millions in client fees and phantom profits.

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