Can we turn this thing around already?
That was hardly a dip in retrospect and we are getting to be very experienced astronauts, able to ignore those little shakes and rattles as the market ship lurches forward into uncharted territory.
This is the one week anniversary of our physics lesson where we talked about how difficult it is to break orbit and, more importantly, about the periapsis – the point at which the market, no matter how high the orbit, comes perilously close to reentering the atmosphere of bearishness!
Ironically, the larger the Apogee (the point at which the market is furthest above "normal") the more terrifying the drop back to the Perigee (underperformance) will seem, even though there are literally trillions of astronomical bodies that go through this cycle every single day without crashing!
In fact, in order to break an orbit, a spacecraft may purposely throw itself into a very close orbit around a planet in order to utilize the gravitational pull to its advantage as it picks up speed for that final thrust into deep space. This is what the Nikkei did today as it dove down to 16,776 yesterday, perilously close to a breakdown before "slingshotting" back over 17,000 this morning!
As we said last week in the parachute article, the perigee is a good time to eject excess mass (nervous investors) as you prepare to leave them, and previous market highs, behind.
All of Asia had a pretty good rebound, led by Thailand which jumped 11% (yes, in one day) as investors poured back into the market – proving once again that a sincere, quick apology is the best way to save a relationship. I’d love to see the VIX for that exchange! "Yesterday, after the market closed, we got together with stock market brokers and the private sector to discuss how to prevent flows from the stock market to bond market instead," Finance Minister Pridiyathorn told The Wall Street Journal in an interview.
When in doubt, let Goldman Sachs run your economy… What kind of crazy little banana republic would come up with that solution? — Oh, never mind!