Jim Cramer, the George Carlin of CNBC, feels "this is the first big selloff when we have seen
the interaction between the ETFs and the common stocks. The common
stocks seem even worse at handling the downside than they are the
upside when the stocks get ramped up by the tail that is the ETFs."
It’s been over 800 days since a 10% correction in the S&P 500. ETF assets were insignificant at the time, but now command close to $350 billion. In reviewing today’s trading activity, many asset classes, sector and global ETFs experienced above average volume. In some cases we saw wide margins between bid and ask prices. Some large blocks were sold in thinly traded ETFs which produced selling prices materially below the actual value of the corresponding indexes.
This may be the first time that ETFs will really be tested. See Jim Cramer’s article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.