Wednesday, May 6, 2015

2007 Top Déjà Vu: Stealth Bear Market

Today is the fifth Anniversary of the 2010 Flash Crash
What has changed in terms of market structure since then? Absolutely nothing. SEC regulators were watching porn for five years straight (let's not be judgmental).

However, they did arrest the UK day trader living in his parent's Hounslow basement, credited with causing $1 trillion in losses. So it's all good now. The world's fake wealth is safe from the UK Etrader.

But, just to prove how safe things are, the Fates have arranged a Skynet system test. Because as it turns out, the price range of the average S&P stock is currently almost exactly where it was at the prior top in October 2007 (blue arrow). Whereas today, the S&P is 35% higher. There was a major divergence back then between breadth and the market, and a mega-divergence now, so it's a fair test:

The Real S&P 500:
52 week range of average S&P stock (index not shown):

The fakest stock market in human history, for the fakest humans in stock market history.