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It seems to me that a consensus of bullish sentiment would be a PRECURSOR to a large correction, since it leads the market into the realm of overbought exuberance.
However, a crash MUST be accompanied by a bearish consensus, after the correction has started. Only through a consensus of bearish opinion will the liquidity of the market be removed (since the majority of traders will be looking to sell or go short, with not enough buyers to satisfy this bearish demand).
It's basically a lack of liquidity that signals a crash.
IMHO
- Stuart
>>> "peter" <derivatives@xxxxxxxxxxx> 07/25 5:04 AM >>>
Never have I heard so many market commentators speculate at roughtly the same period of time,, that the US equity market will fall considerably & to an extent crash. One would think that a crash or even crashette would come along when market pschycology is extremely positive, with only a few , but non-vocal predictions of a substantial fall. Sure market corrections & blips will come & go, & turn into periods of consolidation etc, but thats all in the general scheme of things.
The crux of the matter is, Can a crash occurr if everybody knows about it ???
Focusing just on the "market sentiment"/"pschycology" aspect & not the fundamentals such as P/E, moneysupply growth, etc I would appreciate comments , use your reply to all button.
regards Peter
Krueger Klage Derivatives
Sydney Australia.
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