Chopin Etude op.25 no.11 “Winter wind” = September Stock Market

 I think Chopin’s Etude No. 11 effectively conceptualizes the current market sentiment, both psychologically, and on the tape, in an audiological way.

This particular masterpiece, “Winter Wind”, starts with an ominous and dirge-like tone. Then suddenly, and quite unexpectedly, the heavens open up and unleash a punishing storm. Chopin effectively brings to the piano a “down-pouring” feeling on the treble clef- you can almost “hear” the downward trend of the stock market like a perpetual dark storm, and you can feel the burden of the credit crisis upon your shoulders as hailstones fall from the sky. Meanwhile, throughout the song, there are glimmers of hope as the chords change from minor to Major, just as news of Government intervention try to weather the credit storm by offering you an umbrella of bailouts, unfortunately that are filled with holes. However, the storm comes back with a vengeance, the tempest carries on, and all you can do is wait until the winter wind passes…

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Okay, so I went to the local Acura dealer today to see if I can buy a new car for a tax right-off (from shorting this stupid market), and man, the car salesman I was dealing with was soooooooooooooo down.  I mean, he had NO motivation.  Anyway, we took a test drive, and he was all blah blah blah.  I was thinking to myself, this is the most idiotic salesman I was dealing with… and I liked it!  He wasn’t pushing me around.  His mind was obviously somewhere else.  I was trying to figure out why.

So anyway, we sat at the table, I told him I was an accountant (to scare him from screwing with the numbers) and we crunched some numbers.  Then I asked him, “So, how do you think the credit crisis is going to affect the auto-dealer market?”  All of a sudden he opened up….

Dealer:  “My wife is home sick.  Well, not really sick, but sick of what happened today.  We woke up, the market was down -200.  Next thing you know it was down -700.”

Gio:  “I know (I remember shorting it, I thought to myself).  You were probably banking on the bill to pass.”

Dealer:  “We own quite a lot of Goldman Sachs.  I told my wife to hold on Friday because Buffet was investing in it too.”

Gio: (thinking to myself:  Whoa crap, what an idiot.  Buffet bought preferred stocks.  This guy is sheepish.)

Dealer:  “But the lenders are making it very hard for companies to lease.  Chrysler no longer leases cars because they don’t have the cash to buy back the cars at residual value, so they’ve been taking a big hit.  Acura, however, has a lot of cash so its still okay.”

Gio:  (thinking to myself:  That’s because Japanese auto makers are smater than American auto makers who invest in the fad.)

Dealer:  “But yeah, we’re still holding, and I can’t wait to sell.”

… Is that a normal conversation you would have with an auto dealer?! Anyway, to make a long and boring story short, I intimidated the old and depressed salesman with my ear piece and my constant text-messaging on my BlackBerry, so he ended up calling a younger, fresher, zealous Vietnamese salesman to try and get me to walk out the door with the car.  Then that cornball tried to give me tips on the best way to invest in an auto… I was thinking to myself, these auto-dealers are getting desperate!  The best way to invest in autos, is to short them. 

So there you have it guys.  Today’s -700 in the Dow really took a toll on some people.  Its good to get a feel of how people are responding in your community, because that will give you a good idea if we are approaching a near term bottom.  I forgot to mention, I spoke with another client of mine, who’s wife is in real estate, and she’s doing something like selling 100% financed homes through the Government.  Wow, I’ve never heard of that before!  But at least there’s still some fighters out there, and I take my hat off to them.  Oh wait a minute… the Government is giving out homes?  Is this a modern day soup kitchen?

Anyway, I’m interested in how your community is responding to our market meltdown.  Have you ever talked to some everyday-person, like your doctor, a teacher, a trash-collector, a supermarket cashier, a bank teller, a farmer… what are thier thoughts on the market?  Are they in panic?  Concerned?  Oblivious?  Are they depressed like this auto dealer I met?  Its AMAZING to see how uneducated people are about our markets, even simple economics, or the benefits and ramifications of the bailout bill.  Whatever they see and hear on TV dictates their way of life.  Try spark a slightly intellectual conversation with your average Joe about the market… see what they say, but only make fun of them in your head.

Oh yeah, the results of the Poll:  “Do You Think the Dow will Get Under 10,000?”

82% Yes
18% No

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The last time the Dow was under 10,000 was in March of 2006.  The Dow peaked on October of 2007 at 14,198.  It took the Dow almost 2 years to move 41%.  So far, not even a year has past, and we are about 500 points from 10,000.  So, what do you think?…

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Cal-Maine Foods, Inc. [[CALM]]

James River Coal Company [[JRCC]]

Excel Maritime Carriers Ltd [[EXM]]

JA Solar Holdings Co., Ltd. (ADR) [[JASO]]

Petrohawk Energy Corporation [[HK]]

Apple Inc. [[AAPL]] …?

DryShips Inc. [[DRYS]]

Excel Maritime Carriers Ltd [[EXM]]

LDK Solar Co., Ltd. [[LDK]]

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Do not make any trades until the final 3 minutes of trading, unless you see clear direction.  Judging the action in the tape earlier, and the Vix up 30% today, I am expecting unreasonable and panicky action at the close.  I wouldn’t be surprised if we see a 200 point move in the Dow in either direction in the final 30 minutes, then a fade of about 100 after that.  Meaning, you probably will screw up your entry points.

Right now, I want to get long this panic.  I mean, 30% spike in ONE DAY on the Vix?!! That probably deserves a 1/5 entry position of a stock.

Also, oil is down hard again, especially alternative energy.  I think we have a good opportunity to buy some energy stocks.  For example, GMXR is near a critical support, so you can get long here with a stop right at 42.  Anyway, that’s what I’m going to do.

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