Derivatives.....

This headline from Seeking Alpha merits comment. "Derivatives Trade Soars to Record $681 Trillion"

I think that CDS may be propping up the equity markets by acting as ~$0 puts. (In the event of default, equity typically loses almost everything.) Hellasious on Sudden Debt says that CDS issuers are unregulated, and they provide a false security. The CDS issuer may be more likely to default on the CDS than the company it's supposedly protecting.

The total notional amount of derivatives increased 27% in the third quarter. My guess is that this explosion is a result of much more protection being bought. Perhaps some investors are wise enough to take out multiple CDS contracts. Most probably are not. My guess is that the stock market won't really drop until/if/when the CDS market starts to unwind and shrink.