If Pr(crash|drop) is not quite large, then Pr(smallish decline|any decline) should be reasonably big. Each observation of a drop without a crash is (some) evidence against the antecedent.
If the stock market were responding appropriately to the conditions
It sounds as if you think I was assuming that it is or should be, and I'm not sure why. Could you explain?
If Pr(crash|drop) is not quite large, then Pr(smallish decline|any decline) should be reasonably big. Each observation of a drop without a crash is (some) evidence against the antecedent.
Each time you strike a match without blowing up might be evidence that you're not in a building full of gasoline, but if you see the gasoline, the match-striking evidence doesn't weigh nearly as heavily.
I was slightly more specific in another question chain about what I meant by slump, and a 10% drop isn't quite what I had in mind (neither is today's slump, which could ...
If it's worth saying, but not worth its own post (even in Discussion), then it goes here.
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