Well-Poised for An Outlier ~ The Risk Averse Alert

Thursday, September 23, 2010

Well-Poised for An Outlier

Prior to the flash crash of May 6, 2010 I had never before heard the name Mark Fisher. During that evening's Fast Money broadcast Fisher was interviewed and spoke about the fact that, because energy market trading was closed at the time the stock market's flash crash transpired, crude oil was spared a $20 haircut. (See "The Fat Finger Called Glass-Steagall" for Fisher's interview.)

Oddly enough, just last night it seemed appropriate to summons the spirit of that day's chaos in anticipation of more to come. And who makes an appearance on tonight's Fast Money show? None other than Mark Fisher...

Fisher's remarks during the first two minutes are of interest here....

"Outright fear," eh? Well, apparently bullish investors surveyed by the American Association of Individual Investors haven't gotten the message. Fisher's conclusion regarding policy response to date, and its affect on market psychology, certainly jives with my sense, too. One is not at all crazy to think that, at best, time for battening down the hatches has been bought.

Enter the Fast Money chartmeister, Carter Worth...

Worth concludes the market is at "a moment of equilibrium." It's the same conclusion I recently made via OEX monthly RSI.

But "muddle" going forward? With Fisher's "outright fear" driving market psychology? (Indeed, is not this the principal cause for "leadership" resting with large cap issues paying a respectable dividend yield? [David Goldman is chasing these, too.])

So, add an Oppenheimer technical analyst to a very crowded complacency camp.

It is this element — widespread complacency — most concerning to that fear of a giant gap lower catching most everyone off-guard. Complacency is meeting a lack of political will to honestly deal with deep issues affecting financial security: a condition also breeding "outright fear." These opposing mindsets really make for fine opportunity to press upon both and make a killing — first, playing fear to drive the market sharply lower, then counting on complacent suckers to feed their shares at bottom.

Fast Money
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