S&P to drop (another) 300 points?

Guest Post by Macro Story;

In hindsight one would say shorts make a “killing” during the 2008 meltdown or the 87 crash, etc. The reality is many were not in the trade or if they were stayed too long only to turn a profit into a loss. I read about the 87 crash where after closing out a position the Friday before and witnessing the carnage on Monday the trader doubled down on a new short on Tuesday making the worst trade of his life.

Earlier I posted the following chart of September 2008. Lehman Brothers fails yet two days later the market is higher. Fast forward to September 29, 2008 where markets are now in oversold territory and due for a technical bounce. They in fact rally for two sessions at which point I imagine longs opened positions and shorts covered.

Big mistake!  Over the next seven trading days the SPX lost 300 points. Now that is why I say markets reward conviction.