Market Participants Have Short Term Memory

panic

Over the last week or so there has been an outright panic on twitter in regards to the recent market action.  Just yesterday the CBOE put to call ratio printed its highest reading in 4 years, higher than any reading we saw in the summer of 2011 when the Russell 2000 lost 23% 12 trading days (7/22/11 -8/9/11).  During that time we had a real panic, forced liquidation, on 8/4/2011 we had 2,006 stocks down 4% for the day, on 8/8/2011 we had 2,483 stocks down 4%, on 8/18/2011 we had 2,066 stocks down 4% for the day, so far in this sell off the peak reading has been 462, no panic, no real selling, or forced liquidation like many are saying.  The over reaction so far has been amazing.

Stocks Down 4% in 1 day 7/1/11 to 11/1/11 click to enlarge

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Stocks down 4% in 1 day 9/1/14 to 10/14/2011 click to enlarge, and as you can see no panic, no real forced liquidation, yet. (data courtersy of Stockbee)

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It will be real interesting to see how negative sentiment would get if we actually saw some real selling like we did in the summer of 2011, so far aside from the energy names this has been a walk in the park. And with the average 5% plus correction lasting 22 days since 2009 then the bears better start doing some real whacking because we are now on day 18, ht @MktOutperform.  Understand that in this post I’m not stating what will happen or what will not happen, just simply stating that we have not seen real panic like many are saying, and the charts above clearly state that.

charlie

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Frank Zorrilla is the founder of Zor Capital LLC a New York based investment management firm.  Our goal is superior performance, with preservation of capital as our number one priority. Zor Capital manages separate accounts (both taxable and retirement) for accredited investors and institutions. This structure gives clients access to a hedge fund like strategy while maintaining 100% control of their accounts.  Managed Assets

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.


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