"What CAUSES such a mad, sudden flight to the wings??? Thank goodness for stops, is all I can say. Unfortunately there is always the odd position that one HASN'T protected in this way.

"I must say David, was very prompt in calling the action a sell signal, several days ago. It just seemed so unlikely then that I didn't act on it. And am the poorer today because of that."

Eoin Treacy's view Thank you for this email which others may also find of interest. Emotional contagion is readily observable in all groups. Anyone who has ever been to a football game, concert or political rally can attest to that fact. However contagion takes on an additional dimension when applied to the financial markets, not least because of money and leverage.

Price charts allow investors to see a situation rapidly deteriorating. Media outlets reflect hysterical views. Pressure builds as profits erode and losses mount. At the other end of the scale those who are short are triumphant, their perceived security is attractive and their arguments will appear compelling. None of this hides the fact that very few instruments go to zero. Extremes of crowd sentiment tell us more about what investors have already done than what they are going to do. Crises breed opportunities. Delegates at The Chart Seminar will be well versed in these dynamics.

Everyone knows what happened last time. This is at least part of the motivating factor behind investor's surge to the exit over the last week. Visions of October 2008 are no doubt being revisited for some. Profit erosion is debilitating because no one wants to sell only to see the instrument rally emphatically soon after. When the pressure becomes too intense, erstwhile bulls convert to the bearish camp by selling or going short. They now have a vested interest in seeing the market decline further.

Most investors have some form of diversification in their portfolios. This means that when they experience a loss in one portion of their portfolio, they are tempted to sell something else to plug the gap. They have the choice of either selling the most liquid instrument and/or those with the best paper profit. This means that what might once have been considered an uncorrelated asset can become highly correlated as selling pressure takes hold.

For example, Indonesia has very little exposure to the US or European economies. Its growth dynamic is predicated on the emergence of the domestic middle class supported by strong economic growth and the commodity export sector, primarily to China. However, the Index has been among the darlings of the investment community. As we have pointed out on a number of occasions over the last week, it was unlikely to continue to hit new highs in such an anxious environment for the wider global financial market and pulled back sharply today, forming a large weekly key reversal. This likely marks a peak of medium-term significance.