Not much to say here – it’s a bloodbath out there. When S&P 1175ish was broken I said I did not really see any support until 1125. I thought there would be some sort of bounce between here and ‘there’, before potentially finding our way down to 1125 however. That did not happen – it has been a straight elevator down. ‘There’ is already here….
The way we are finishing is of course ugly and there won’t be much to take home from it. If it is just the debt downgrade we are reacting to, I am surprised for this sort of a reaction but I think its more of a recession call. One that the bond market has been signaling for months, but that the equity market has been ignoring, just as in latter 2007 to mid 2008.
My call over the past half year for QE3 by ‘this winter’ might be proven to be conservative. The desperados at Jackson Hole may be making a repeat performance in a few weeks. Heck, they might show up tomorrow at the Fed announcement. Expect massive volatility as speculators demand a white knight on horse to show up tomorrow afternoon.