As we’ve been warning: Volatility is now on the rise. We expect it will continue until and unless the central banks panic, and revert to even more money printing.
All this volatility is causing the major US equity indexes – the Dow, S&P 500, Nasdaq and Russell 2000 — to whipsaw violently. Down, then up, then down, then up, and now back down again.
The computer algorithms that now drive trading, which were trained on the high liquidity days of old (by which I mean up to a couple of months ago), are suddenly flummoxed.
They're used to market declines finding bottoms quickly, sometimes in less than a minute, and then launching back skywards. For many, this enshrined a “buy the dip” mentality which indeed worked well for years while the Fed "put" was in place.
I’ve monitored numerous online investing chat boards for a long time. "Average Joe" traders have been licking their wounds since the October correction, but they've been trying to remain bullish. Many were excitedly talking about their dip-buying “strategies” as recently as yesterday as the Trump-Xi trade "agreement' euphoria hit the tape.
But now? After todays’ nearly 800 point drubbing on the Dow and far worse percentage losses on the Nasdaq and Russell 2000, I’m seeing people starting to throw in the towel. This gallows-humor comment I saw this afternoon captures well the new bearish sentiment starting to infect the trader ranks:
(Source)
Of course, others are still sticking to their “hold the course and keep buying” guns. We'll see for how much longer…
A Crash Once Delayed
I was personally convinced that things were breaking down back in 2016. And, in fact, they were.
As we can see in this chart below from John Hussman, the Everything Bubble top (Bubble #3) was rolling over and starting to break below is Bollinger bands as 2016 began:
(Source)
That it didn’t break down was not some act of “investors” suddenly rethinking things; but almost entirely due to another highly concentrated round of QE ( a.k.a.
by jairr 
