for the Revulsion Stage
got the shock and awe rally Monday and many were celebrating
that the worst was over. Behavioral traders saw this as
the needed relief from markets stretched too much to the
downside and an opportunity to sell all underperforming
assets. Today, we hit technical resistance on the S&P
and we are now in position to retest and possibly undercut
the lows from last Thursday and Friday.
Panic and sheer
terror on Friday were replaced by hope and jubilation on
Monday. Now, we are likely to see a washout where just about
everyone who has not sold will give up and sell. They will
walk away from the markets and vow never to return again.
This will be the complete revulsion stage. Only when this
happens will the markets be in a position to begin to rebuild
the technical damage. This will take time, and it now appears
that the highs in the broad indices have been seen for many
years to come.
More from Guest
* Farrell: Market
Bottom? Be Careful
* Crescenzi: Big Signal in the Swaps
* Busch: Rally Will Be Capped
public trusted that their financial advisors and those managing
their money would take care of them. They are now on the
hook for what is likely to be in excess of $1 trillion.
People will have nightmares about the Great Crash of 2008
for years to come. They will lose trust in the entire financial
system and in many of their advisors who allowed their accounts
to lose somewhere between 25% and 50%. The small retail
trader will leave the markets in disgust and distrust. They
have seen the banking system and selected public companies
saved by government intervention.
retirement accounts and life savings of many have been almost
completely destroyed. Americans are not stupid. They know
that the banks and their predatory lending practices (coupled
with the greed of many who just had to get a piece of the
housing bubble) are at the root of this crisis. They also
see that many of said banks have now been bailed out by
a new social order and that they—the people, their
children and their children’s children—will
pay for this through many years to come.
What are Other CNBC.com Guest Bloggers Saying ...
M.D., Ph.D., is a financial psychiatrist and chief global
risk strategist for Ingenieux Wealth Management in Sydney,
Australia. She also offer trading consulting and coaching
services via her Web site, TheTradingDoctor.com
by Janice Dorn