Could the market crash again?
It seems many of the bears are banking heavily on that happening. While anything is possible I think we would need some kind of catalyst for the market to crash twice. I will also note that we have never seen two climax selling periods one on top of another.
As I've pointed out in prior posts the S&P is still 25% below the 200 DMA. It's pretty tough to keep an index that depressed below the mean much less look for another massive move down from these depressed levels.
It took an implosion of the credit markets to start the last crash. Now we've just witnessed the first negative earnings in S&P history and the market has responded by trading sideways.
I'm not sure what we would have to see at this point to get another crash started but obviously poor earnings isn't going to do it.
It seems more logical to expect the market to either continue to trade sideways or slowly drift lower as unemployment continues to rise.
My guess is that the market will probably trade sideways for a bit longer and allow the 200 DMA to catch up a bit before we get the next serious leg down.
This could be a process that lasts into the summer so I'm not sure taking big short positions right now is the safest investment decision.
This probably explains why we aren't seeing any really heavy selling into strength readings lately.