Earlie from Earlie:
Well, it is Saturday morning after another frenetic week in the world's greatest casino. For the bears on this thread, it was a remarkable week that left most of us rather breathless,.... and of course grinning a bit in contemplation of much improved personal balance sheets,.... at least on paper. So where do we go from here?
Not for this well-scarred left winger to even guess as to what the short term will look like (I willl leave that to the chartists in our ranks), but looking out beyond the "expected" (which in and of itself is a worry) September/October "historically nasty period", my guess is that we are not quite ready to tumble over the waterfall's edge, even though all the conditions are in place for this inevitable free fall. My worries that we aren't "there" yet include:
- Too much short side participation via "piling on" by folks new to this demanding (and for them) "new game". They need to be trashed a few times yet, before we will really go over the cliff. Historically, a market wipe-out rarely benefits a crowded short side situation.
- I suspect that the Fed is more than worried about the possibilities of a Sept./Oct. crunch and is probably oiling up the few remaining mechanisms it hasn't already deployed. Yes, I agree that in the end, it will be seen as powerless to cause the tides to recede, but I also think it is populated by folks who think they are able to "manage" the economy, and until they find out that this is but a dream, I believe we can expect them to become much more involved in trying to do just that before they are crushed. Besides which, I always worry when the enemy's camp is too quiet.
- A nasty Friday such as we experienced yesterday inevitably conjures up visions of a follow-on "Black Monday", especially given the late September time frame. Perhaps it is just my contrarian joints acting up, but to me, the probability of such an event occurring this coming Monday is just too much "according to the script". Mr. market rarely delivers what we expect, and there is a surprisingly consequential number of folk out there who think we are "there".
- Too many "bleak articles" have appeared in the press of late, all suggesting a coming major negative market event.
At this end, while I think we are closing in on a BK, I suspect that it will occur when we least expect it to. The historically "happy" period extending from November through Christmas gets my vote as it would likely catch the greatest number of investors off guard.
Paint me paranoid (and probably wrong) with respect to a BK on Monday or even during October.
Best, Earlie |
