Monday, November 23, 2009

Crash Prediction

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?

Who knows?

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.


Anonymous said...

Unrelated issue: What's your gasoline price estimates for 1-2 years out?

Figured this would be a good a place as any to ask.

Slow out.

CaptiousNut said...

Within 2 years, $5 a gallon.

That's why I'm against my wife's desire to buy another Chevy Suburban.

$5 will come mostly from dollar implosion.

Big Mac said...

Been hearing a lot of talk about the ETF GLD being unaudited and maybe short on real physical gold.

Any thoughts on the validity of this?

CaptiousNut said...

I'm sure there's very little physical gold there!

Think of it this way, what today in this economy actually has any real collateral behind it?

That being said, conspiracies with gold (and oil!) go with the territory; they're a dime a dozen.

I don't think gold is a trading vehicle. It's a diversification tool. Buy 100 ounces, take delivery, bury it in the ground somewhere or have it sent to me, the event of complete economic collapse, at least you'll have something of value.

Do that with the hope that you actually lose 50% on it. Nobody really wants a total collapse - nobody in their right mind anyway.

Anonymous said...


Free staters have been expecting the collapse for some time now. They have been preparing up here in NH and I am lucky to call some of them friends. Whether it is windmills, biodeisal producers, land, animals, physical gold etc. Some call them anarchists some just plain old wackos but all empires come to end and they are prepared to defend themselves and their assets. If and when it happens, it will be bloody.


Anonymous said...

Gasoline: That's what I have been thinking. Hmm, maybe time to trade one Section 179 for a smaller one.

Slow out.

CaptiousNut said...

I don't want to buy anything - new OR used - until the market tanks (or oil spikes).

Soon enough everything will be *on sale*.

Anonymous said...

$5 a gallon? That's a nice, round number. How that squares with a collapse, I can't imagine.

What happened to the price of oil in the aftermath of the asian financial crisis/russian default? Why will this time be different?

Prechter may well be right: new lows in oil are on the way, as the coming crisis is The Big One.

Anonymous said...

Hey nutz - I'm new to the board. I just read this and think 99% of traders, advisors and economists think there has to be a sustantial pullback at one point and for you to say that it could happen within the next two years isn't really saying much except allowing you to get on a soapbox after it happens and say I told you so. By that time the market could be at $12,000 so a 2,000 point pullback only gets us back to where we are today.

My only point is we could easily float up 2,000 in a year just as we could crash down. Have you ever heard up in an escalator down in an elevator (don't answer that!)

Now if you want to write something about the cheap dollar, the currency war with China, inflation and use a catalyst for the downturn, then you can prognosticate.

The only thing you should feel confident about is your ability to kill mice.

See ya

super bond boy

CaptiousNut said...

super bond boy,

I've pre-addressed your critique!

My post is clearly labeled *cheap talk*.

And my *within a year* call was also articulated as self-conscious BS.

I am buying LEAPS these days, instead of near month premium, because my money and my mouth are always in the same place.

I have almost all of my trades from the past few years posted on this site. Check them out.

And I've been trading professionally for 14 years now.

Where are your trades posted?