What are the odds of the stock market crashing?

Question

What are the odds of the stock market crashing?

Answer 1

Very low.  Particularly with the Fed safeguards in play, and able to become in play, as needed.

This is even more so with the amount of cash on the sidelines.

Answer 2

Some of the points made so far are on point. With the vast amount of computerized trading that goes on in the market, there are far too many stop-gaps to prevent the market from crashing these days. I would consider a crash when the market trades down 5% or more from our levels which would be a disastrous day. Consider that in the last 6 months (even with the credit disruptions and bear raids in financial stocks), we haven't been down more than about 3% in any one day in the Dow Jones.

To correct some comments:

1) The market will bounce anywhere from 3-9 months BEFORE the economy rebounds (housing market, credit spreads, inflationary pressures).

2) The dollar has been artificially manipulated because of our trade deficit and is not a great indicator of economic stability (although there still remains a correlation).

3) While we are flirting with a bear market for equity, the housing market has been in and continues to be heavily into a bear market. It is the worst housing market since the great depression. And certainly as bad as the equity markets have been, we haven't been drinking the same coolade there.

We are likely to continue the market decline considering the stimulus for us going lower has not eased at all. (heck, Merrill just had to come out saying they need to raise capital via equity offering--that of which they've been saying they didn't need to do for the last 6 months). Conditions are still very weak. We will see "crashes" in individual equities for sure, but not likely the market itself. If you want to see a crash, chances are likely in XL (if the panic hasn't already settled in lol).

Bottom line: I personally would put the odds of a crash at 10%....a strong market decline pushing DJIA below 10000 at 30%....a market that will make new 52wk lows at 90%

Answer 3

not crashing, but going down another 2000 points maybe? yes it's likely.

market won't bounce till

-housing bottoms

-dollar rebound

-gold decline

-credit crisis bottoms

get ready for another year of bear market.

sell whatever you have that you can take a loss from or still in the green

i'd be shorting now and buying puts for the next 6-12 monthes

Answer 4

Very slim in none, but then again what do you consider a "crash"

There are too many stop gaps in the market to permit a "crash", there are too many opportunities for traders/investors not to turn into buyers when the makets reaches certain levels

With computerized trading, many professional will turn to buying even if it is short term.

Market drop yes, market crash NO

Answer 5

Considering what has recently happened to financial stocks, I would have to say that the odds are better than many seem to believe.  Have you looked at the price of WaMu lately and compared it with the price a year ago?