In the weeks preceding the runup to today's crash I saw a number of overlays of the Hope Rally to the 1987 market before the crash, including this comparison and chart:
I expect more on this over the next day or two. We explored it here at some depth on the anniversary last October and later in December. Even before then, Yves made the first comparison. What shoudl be clarified overnight are the three main causes of today:
- 1987: There are some eery parallels to 1987: pending financial reform, program trading then and now, and troubles in Europe: then a falling Mark, now a falling Euro.
- Big liquidation: There is a rumor of a failed large hedge fund.
- Mistake: There is also a real possibility of a "fat finger" today, hitting the wrong quantity key for P&G and driving program trading bots into a frenzy which abated pretty quickly. Here is that trade (from Market Ticker):
Here is the result (from Jesse's Café Americaín: