re: There are some major issues lurking in the US financial markets

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Tell us how long it took to recover from the Great Depression lows

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You call this a "Gotcha"? Try again. Let's say you invested at the worst possible time, 1929 the day before the market started falling, the bottom was 1932, you would have been at break even in 1936.

That's the longest recovery period in history, about 4 years. And that's if you didn't buy anything else between 1929-1936.

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I don’t really know why we follow the dow anymore,

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I mention it because I believe the average person on the street still recognizes the Dow Jones and couldn't tell you what the "S&P 500" means.

But your point is well taken. The DJIA is not the market indicator it once was when the 30 stocks in it accounted for 75% of the market's average daily trading volume. And that wasn't all that long ago...maybe the early 1980's or so.

Russian: when will AMZN be in the Dow?

This chart is similar to the chart I saw last Thursday afternoon ( LINK):



This indicates that the markets were sensitive to the Fed's somewhat inflexible projections for 2 interest rate hikes in 2019. That's what caused the S&P 500 to drop from about 2570 to 2540 (about 1.2%), before digesting the situation a little more and stabilizing with a run-up to near 2560 (only about 0.4% down from 2570).

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So in the 45 minutes before his comment, it dropped 1.8%, and in the 45 minutes after his comments it dropped 1.22%.

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I think you're mistaken here. I'm seeing about a 0.5% drop going into Powell's comments at 2:42pm ET, and then about a 2.4% drop immediately thereafter, before closing the day another 0.8% down as markets digested the situation.

This is not full proof of causation, but in the messy real world of markets, it's about as good an illustration of live comments moving markets as you could hope to see.

And we can debate the tedious details or the finer points of whether markets may have had inside information minutes before the remarks, or had delayed reactions that overlapped, or whatever, but the main point remains--Powell obviously caught the markets by surprise with his comments on Thursday. For one to assert that nothing that Powell said on Thursday was even slightly unexpected by the markets is completely unreasonable.

My best estimate would be early 2020.

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and the S&P 500 dropping into the 1000 - 1500 range remains firmly intact.

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So go long on hookers and blow?

So much for stage 7 then huh? Didn’t you call that 2 weeks ago when the market bounced just barely and said this was this biiiiig leg down?? Lol

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Financial "news media" is a complete joke and a wonderful contrarian indicator.

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I wouldn't go that far, but I do think you have a valid point, since people in the media are running a business and have to cater to what the people happen to want at the moment.

If you read RealClearMarkets or common investing columns, you'll see that we certainly aren't seeing much fear or capitulation. The "steady as she goes" chorus is still drowning out the minority viewpoint of the bears, although obviously the comments of various non-media bears will get headline spots on weeks that see big market drops. So the current media atmosphere seems to be reflecting a transition period to me... which makes sense.

I mean, heck, President Trump himself just jumped on the bandwagon and advised people to "buy the dip" (on Christmas Day, no less), so it's not as if the typical common man has bought into the bear market yet. Just read this message board, for example.

But for the smart money ahead of the media curve, the working strategy going into 2019 will likely be "sell the bounce." I'll probably just sit in cash for the remainder of 2018, but next week I'll probably be looking for good entry points to go short again.

Quasi-conservative, since I think there is a more conservative scenario where it never gets as low as 1500; but for the most part, yeah.