Monday, November 23, 2009
Since talk is cheap, I'll say this:
I predict there will be a one-day major stock market crash. Forget an orderly retracement.
No, this bubble is going to burst in an instant.
This market is going to drop 2,000 points in one fell swoop. Circuit breakers be damned!
How do I know this?
Well, volume has been anemic the whole way up. Quants or computer-driven traders have been responsible for almost all of the trading. Shorts are all but wiped out. And how could they not be? There hasn't been so much as an intraday downtick in 8 full months.
The market is going to dump early one day, and all the Morons at once are going to rush for the exits.
Of course, the computers will be smashing the $hit out of the market on the way down - IN FRONT of said latecomers.
Traders will be the only ones buying as it crashes...
And they will get their a$$es handed to them as the bottom falls out.
When is this going to happen?
It's always safer, batting average-wise, to say *next quarter* or *next year*. For example, "I'll pull my home off the market and list it NEXT SPRING, when the housing market bounces..."
All I'm really confident of, is that it's going to be very hard to profit from this inevitable crash. It's going to happen real fast - which would not be friendly to those levered shorts of mine - SRS, FAZ, EEV, and FXP - and the market may even go MORE vertical right before the bust.
About those POS ETFs....I haven't been adding to them much lately.
Instead, I've been accumulating far-out, 2011 puts on the likes of Wells Fargo and Simon Property Group.
Today's market truly is in rarefied, bubble territory. And I bet there are probably better trades out there than shorting bailed-out banks and stubborn REITs. For example, look at a stock like Sears-Kmart. That has over 40% of its float sold short. Captial One, that subprime credit card company I made $$$ in last year, it too is way back to a ripe $40 per share.