Gundlach Explains Why The Market Hasn't Crashed Yet: "People Are Holding And Hoping"

"One week ago, after Carl Icahn joined the legion of doomsayers launched in mid-September by none other than the former "balls to the wall" bull David Tepper, we wondered who would be next:

On Friday we got the answer, when none other than the ascendant "Bond King", Jeff Gundlach, whose Doubleline Capital just recorded its 20th consecutive month of inflows (contrasting with 29 straight months of outflows for former bond Goliath Pimco) became the latest to join the dark side when shortly after an abysmal payrolls report, he warned that the U.S. equity market as well as other risk markets including high-yield "junk" bonds face another round of selling pressure.

While perhaps not as dire in his outlook as Icahn, Gundlach explained why far from the correction being over, the market still has a long way to go. He told Reuters that "the reason the markets aren't going lower is people are holding and hoping," Gundlach told Reuters in a telephone interview that "the market bottoms out when people are selling and sold out – not when they are holding and hoping. I don't think you've seen real selling in risk assets broadly. Markets need buying to go up and they need volume to go up. They can fall just on gravity."

So after taking a its biggest step lower since 2011 in the past month, why has the selling in the S&P500 stalled? Because, well, hope may not be a strategy but now with the Fed's credibility rapidly evaporating, it is all investors have, or as Gundlach puts it: "The reason the markets aren't going lower is people are holding and hoping." Incidentally, there is a reason why hope is not a strategy: in the end, it always fails..."

at http://www.zerohedge.com/news/2015-10-04/gundlach-explains-why-market-hasnt-crashed-yet-people-are-holding-and-hoping