Stock ‘generals’ begin falling amid bruised market

Yahoo Finance's Jared Blikre explains what's unfolding in the stock market as well-established retail leaders tumble and investors look for a capitulation point.

Video Transcript

JARED BLIKRE: Markets are battered and bruised. Investors in these markets are battered and bruised. We have a situation where-- and I like to say that soldiers have fallen. Anybody who has-- any retail investor is probably underwater in their accounts by a large margin, especially over the last two years.

Any new investor, if you told me 90% of them are underwater right now, I would not be surprised. If you told me 1/3 of them had been wiped out completely, I would not be surprised. But now, now the generals are falling. So who are the generals? We have Walmart. We have Target. We also have Melvin Capital Management. So we have firms and in Wall Street, we also have companies that are just puking at this moment.

Now, the good news is, when the generals start falling, we're usually pretty close to the end. But you guys have had some excellent conversations with markets yesterday. Steve Sosnick in particular, he's looking for capitulation. So am I. This market could do any number of things. I'm seeing the potential for a flashy bear market rally right now, but we could also head down substantially lower.

So I think capitulation comes rather soon in terms of time. I'm talking days, maybe a week. But in terms of price, it's hard to say exactly where that's going to be because when the generals start falling, that's when chaos erupts. And we don't know where all the problems lie, and that's part of the problem.

So can it get worse? It can get a lot worse if the investment banks like Lehman Brothers start falling. But I don't think the Fed is going to let that happen again. I think the Fed will pivot, but I think that's going to come in a month, two months-- hard to say. So are we at the bottom right now? Probably not, but we could still get that flashy bear market rally, guys.