Everything I am looking at right now suggests to me we are about to ‘engage’ on flash crash part II during the next 3 trading days. I am talking a one day 7 to 10% down day during one of the next 3 trading days.
The only confusion I have left is whether or not we get a huge ONE DAY bounce before hand perhaps on the order of 2 to 2.5 % with a close near the highs. If we do get a one day bounce then it really ought to happen tomorrow. We are in a spot right now where it is ideal for a big one day bounce to occur. I suppose it could also happen on Friday on a less than worse jobs report, but that seems like an unlikely scenario going into a 3 day long weekend.
On the other hand I am seeing signatures that look very similar to the stance the market was in right before the May 6, 2010 flash crash.
Not too many others seem to be calling for a crash. Other than the Bill Mclaren interview I posted the other day which was on CNBC, I do not see anyone else on CNBC talking about a crash, nor do I see it on popular message boards. The traders who were previously looking for a crash have pulled in their horns or are looking to go long. Perhaps it is because we are in JULY and not October. A crash just cannot happen during a slow summer month of July right ? Wrong. It is probably the worst time for one to happen too because everyone is starting to pack their bags for the 3 day holiday weekend and looking forward to fireworks and grilled hot dogs.
