Flipping through this morning’s news in Europe indicates that essentially nothing has happened to change the fundamentals of the situation. Every time the SPY or the Dow goes up I ask people “Why? What sentiment is causing this other than that we’re tired of it being down?”  That’s essentially what all the technical analysis is saying, since it’s ignoring the daily flood of bad news and bad fundamentals. We may be reaching a short-term workable bottom here but then there’s going to be another forced sell-off as the next wave of bad data/news comes.

It’s not like it’s the end of the world and we should get guns and canned goods, but it might be worth studying the 1929 crash, which actually is a misnomer–there were a few days of dramatic drops, but then the market recovered almost up to 90% at points and sort of bounced up and down while still slowly and steadily losing value until it bottomed out in 1931. A stock market crash isn’t a one day event but a couple of linked large downward moves with no fundamental reason for future optimism in the medium-term.

Thus, my earlier plan will likely go into effect today or tomorrow, but I’ll be adding Yahoo puts on the way up as I would expect them to get a pop based on news that there’s a meaningless stock buyback that allows their institutional holders to sell off.  That said, I also lost a lot of money betting against AOL time and time again: the tech dinosaurs have a lot more staying power than a young whippersnapper like myself can see. I’m also going to hold off on my LNKD put: unless they’re cooking their books (which I not suggesting) their growth and overall model looks really strong so while a low tide lowers all the ships I think they could hold up fairly well.

Shipping is going to get murdered in its bed because it’s already been suffering structural problems of overcapacity for the last 4-5 years or so and I’ve decided that it’s best to hit them while they’re down: GLNG, NAT, SSW and TNK all look like great shorts to me (as a basket, one could randomly pop, if I only go with one it would have to be SSW) with possible downside of 20-30% in the next 3 months.  GASS is a possible short later. They seem to be a well-run company at this point but if they can’t buck the macro trends the downside is pretty much bankruptcy.

Attacking natural gas is a little bit more risky and diversified and there are actually some newer micro/medium-cap companies that understand the new paradigm and may do better than expected, plus everyone gets all serious about energy independence and not falling behind in the technology race so there’s a huge chance of favorable government intervention.

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