The Dreaded Downturn

[CalTrade]

Maybe I am asking a very complicated questioin and making it sound simple; but What Causes the stock market to suddenly downturn? I understand when there is some major event that makes investor's nervous, but how does a market fall suddenly otherwise?

For example, last week it took a dip. Why? How can it just happen overnight?

Thanks for your insights. I'm trying to understand.

 

[MasterOfCoin]

Maybe I am asking a very complicated questioin and making it sound simple; but What Causes the stock market to suddenly downturn? I understand when there is some major event that makes investor's nervous, but how does a market fall suddenly otherwise?

For example, last week it took a dip. Why? How can it just happen overnight?

Thanks for your insights. I'm trying to understand.

Greed and Fear.

The two words that move markets.

The rest is herd behavior. Once a stampede starts ........

All it needs is something to set it off and that needn't be a major event.

Panic does the rest.

 

[new_trader]

Maybe I am asking a very complicated questioin and making it sound simple; but What Causes the stock market to suddenly downturn? I understand when there is some major event that makes investor's nervous, but how does a market fall suddenly otherwise?

For example, last week it took a dip. Why? How can it just happen overnight?

Thanks for your insights. I'm trying to understand.

The narrative is that rising yields on longer term Government Bonds was signalling rising inflation. This was interpreted by the market as a sign that Central Banks would need to tighten monetary policy which is negative for stocks. There is more to it, this is just a synopsis.

 

[Inquisitor]

Markets decline when there is a "Lack of buying support" and that is all there is to it. If buyers are lacking then prices decline until enough new buyers enter the market. There is a myth that people who "short sell" cause markets to decline but that is not the case because for anyone to sell short someone else has to take the other side of the trade. So if someone wanted to sell short at a price that no one will buy at then the market would have to go down to a level where buyers will take the opposite side of the trade.

 

[postman]

The narrative is that rising yields on longer term Government Bonds was signalling rising inflation. This was interpreted by the market as a sign that Central Banks would need to tighten monetary policy which is negative for stocks. There is more to it, this is just a synopsis.

Just to add to this.
Big fund managers are always balancing risk and reward. When the reward from a 1.5% guaranteed rate of return (10 year bond yield) outways the risk of holding overly inflated assets (such as bitcoin and Tesla shares), funds re allocate capital.
Plus when a big fund like Cathie Woods see's massive withdrawals (because people finally realise she's a one trick pony) that fund has to sell billions in shares to pay the investors who want to leave.

 

[CalTrade]

Thanks for all the insights., Very much appreciated!!!

 

[postman]

Just to add to this.
Big fund managers are always balancing risk and reward. When the reward from a 1.5% guaranteed rate of return (10 year bond yield) outways the risk of holding overly inflated assets (such as bitcoin and Tesla shares), funds re allocate capital.
Plus when a big fund like Cathie Woods see's massive withdrawals (because people finally realise she's a one trick pony) that fund has to sell billions in shares to pay the investors who want to leave.

ARKK is "in the midst of its worst stretch since 2018",

ZeroHedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero

www.zerohedge.com

 

[jonfuentesx]

In the vast majority of cases it is market manipulation: rapid movements in price while everyone sleeps to cause maximum psychological impact when they wake up. Hedge funds need liquidity but they can't move the price enough, so they just pull the price as inducement for retailers to do their dirty work.