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I began writing a series of articles here on MarketWatch expressing my concern that the odds of a "flash crash" were rising, but that it wasn't a prediction. In the article "Forget Facebook; stocks are at serious risk" , written on May 18, I very specifically started the writing saying "something major has changed in the last 48 hours which could result in a 'mini-Flash Crash' in stocks if not reversed shortly."
I ended the writing by saying that "I am specifically highlighting something which is a timely observation driven by a sudden change in risk-sentiment in the bond market. If a breakdown can be averted, a significant move higher remains a very real possibility in risk assets."
U.S. markets last week stabilized despite European markets remaining wobbly. On May 21, in the article "Reflecting on reflation and the Spring Switch", I noted, as it related to the prior week's dramatic increase in credit spreads, that "should what happened last week be a complete overreaction, another 'melt-up' rally could return as reflation kicks back in alongside risk-taking as money gets uncomfortable with Treasuries yielding levels below the Fed's 2% inflation target. The Spring Switch [out of bonds and into stocks] may get flipped simply because the catalyst ends up being no (negative) catalyst at all."... Continue to read.
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