Crash Trifecta

I’ve always believed that crashes are fairly predictible because human nature is fairly predictible.

This market is setting up for a crash on Monday. Trust me.

This will be the third market crash of my investment career. A trifecta.

I think this one is mirroring the Oct ’87 crash. We shall see.

Regardless. I do agree with the Fly that tomorrow will be down, which sets up Monday, October 13th as “the day”. Besides how much more unlucky can you get than “13”?

So far the “crash” has been more of a slow motion train wreck. We need to have that one big final panic day. It should be over 1,500 points down on the Dow, or it’s not legit.

Trust me, so far it’s been mainly the hedge funds, pensions and institutions that have been the main participants in this egregiously big sell off.

The Fly may call the brokers idiots, but one thing they do is prevent their clients from getting out when the market is down. In spite of that, eventually, the public just can’t take it anymore, and they sell everything. They get out, then fire their broker.

I think we are nearing that point.

We all know that the average investor actually buys high and sells low because they never really understand the risks of the stock market. They let their emotions rule instead of logic. They’re always the last ones to get in, and the last ones to get out. Always. Call it destiny or whatever.

Now they are starting to get out, no thanks to their brokers.

I now expect the bank stocks to rally into the end of the year and into the New Year. But I’m waiting until next week to see how Monday turns out before taking Comrade Hank’s advice to buy them.

I’m spending the next few days pouring over stocks—blue chips, heavily beaten down names that are paying good secure dividends. General Electric Company [[GE]] is one that comes to mind immediately.

Maybe I’m wrong about all this. Then again, maybe I’m not.

That’s right. The world no longer needs metal. We’re going to start making cars out of lightweight plastic. You know, to increase fuel efficiency and all that. Owning anything made of metal, in the future, will be outlawed.

Yesterday’s action took the bullish percent index on the non-ferrous metals sector to ZERO. No stocks are on buy signals. None. Nada.

It’s bad enough that the NYSE Bullish Percent Index hit 6% bullish yesterday, but ZERO PERCENT bullish for the non-ferrous metals sector? You must be joking.

This is an area that Costanza traders might want to mine (pun intended).

Could the metals stay this depressed for a while? Sure. But, there’s something called the law of averages that tells me that the current situation is an egregious anomaly, worthy of contrarian thinking. 

Stocks to watch: Alcoa Inc. [[AA]] , BHP Billiton Limited (ADR) [[BHP]] , Century Aluminum Company [[CENX]] , Cameco Corporation (USA) [[CCJ]] , Freeport-McMoRan Copper & Gold Inc. [[FCX]] , Southern Copper Corporation (USA) [[PCU]] , [[RIO]] , Rio Tinto plc (ADR) [[RTP]] .

Disclaimer: Constanza traders only.

Short term trades.

[[SSO]] , @ $36.66

[[QLD]] , @ $37.88

….ssshhh. Hank is speaking….

For a short term trade. Stop @ $39 for Freeport-McMoRan Copper & Gold Inc. [[FCX]] .

Disclaimer: Gunslinger trade on a cyclical stock that has been severely pummeled and beaten with a miners shovel. Trade at your own risk.

Just a quick note: The NYSE Bullish Percent is now sitting at 9%.

It has not been this low in over 20 years. We’re talking about fear and panic based pessimism here.

Five weeks ago, it was at 45%.

There is definitely opportunity for a trade here. But, with the magnitude of this crisis, I’m waiting until we get a reversal up to 16% before going long equities. We could still have more distressed, forced selling, so I want to see some demand come back into stocks in the short run. My longer term outlook is still bearish, however.

If we get a coordinated global intervention by the Central Banks, and the dollar is showing strength, I’m looking at buying the [[QQQQ]] , and focusing on the small and mid cap growth indices via [[IWO]] and [[IJK]] . This gets me immediate exposure to stocks. Costanza developing…………..

The world is for sale. We will continue to see the financial institutions “de-lever” as egregious liquidity needs continue to force the sale of any assets that don’t have a government stamp of approval on them.

“Quality” assets are at fire sale prices. Get yours (but not just yet).

Up to this point, we’ve seen piecemeal approaches by the government and regulators in dealing with this problematic mess. The asshats are finally getting it together and trying to deliver a “global package” to address these most trying and terrifying of times. The obnoxious Irishman’s “GLORC” is part of that.

Looky here: this is not just a banking crisis anymore. This is not just a U.S. crisis anymore. This crisis is for leveraged players and cash players worldwide, as we have seen with commerical paper and money markets. So, place your bets.

The contagion is growing. Hence the markets will continue to sell off assets until a more comprehensive solution begins to  emerge. That’s all it can do right now without massive, coordinated intervention.

What’s the Fix being proposed by our globalists?

First of all, they are working furiously to effect a restoration of banking payments and settlements in the overnight swap markets. Counter-party trust is the issue here.

Secondly, massive capital injections by governments are in the works to fix the brokenness of the current financial system. Simply playing balance sheet games and selling distressed assets to use for funding vehicles, isn’t going to solve the problem of bank insolvency.  We are talking about TRILLIONS of dollars that are needed to fix the problems just here in the U.S.

The United Central Bankers of the World (UCBW) are going to have to reflate economies on a global scale that is unprecedented.

Don’t throw away your gold just yet.

Thirdly, TARP will simply BEGIN to deal with troubled assets on the books here in the U.S. It’s a small fix. However, I don’t agree with the form and substance of that bailout provision. It doesn’t really effectively recapitalize the banking system. It only gets rid of the toxic waste material clogging the system. I would have much preferred to see “The Warren Buffett Way” of capital infusion viz a vis purchasing preferred stock and warrants from these banking institutions of economic death. But, no matter. I’m just a peon.

Finally, although not desired by many true capitalists, more coordinated regulation is on the table to address matters on a global scale. Welcome to the new age of socialism. For you conspiracy theorists out there, this global crisis sets the table for the “New World Order”, elegantly and effectively. Never ask when you can take, I guess.

Keeping watching and observing, that you might be able to escape the trouble that’s still coming. This is far from over, my friends.