Monday, August 8, 2011

THTB Crash Warning

I wanted to hop on tonight and alert everyone that I am very concerned about the possibility of a crash tomorrow.

Crashes are usually not telegraphed so it likely won't happen.  However, the elements for one are there and the price action in the futures is extremely alarming.

We are down an additional 35 handles on the S&P from the close.

Here is a print of the /ES(S&P futures) as of 10PM tonight:

China's inflation numbers that were released tonight are are making matters worse because they came in hotter than expected:
"China CPI 6.5% YoY, higher than expected.

PPI is 7.5% YoY."

This is is hammering the world markets at a time where the world's investors are already completely panicked.

The Bottom Line

I am extremely concerned folks.  The US banks are collapsing. BAC was down 20% on the day.  GS, MS, and Citi were also down big.

The whole banking system has basically been torpedoed for two straight weeks.  The price action is very reminiscent of 2008.  What's scary here is there has been no obvious catalyst for the sell off.

IMO, somebody knows something and the shorts are sniffing blood.  The European banks look just as bad.  Unicredit teeters on the brink of bankruptcy, and I suppose our banks exposure to Europe could be the trigger for the horrific sell off we have seen in the banks over here.

Folks, we are so oversold it's ridiculous, and the fact that there are no buyers tells me something bad could very well be in the mix.

We all learned in 2008 that there were solid reasons why the market dropped down to 6K.   We just didn't know them at the time.  Looking back once we got the facts there were solid reasons as to why we got there. Just watch HBO's TBTF if you want to see how close we came to financial Armageddon.

I am afraid were are now once again at the tipping point.  It's time to stop trading and pray that we somehow find a way to get out of this.

Markets are all about confidence and for the past two weeks confidence has been completely lost.

I am hoping that the Fed can pull a rabbit out of the hat and stabilize things with their statement tomorrow.  I must admit I am not optimistic.

Protect yourself and let's all hope for a bounce. 


Anonymous said...

Great perspective. It will no doubt be volatile. Thanks for shedding some light on this, we could see monstrous swings today... im content to sit back and let the big boys try and figure out the markets.

Anonymous said...

I have to dissagree with you when you are wanting the Fed to pull a rabbit out of the hat to turn this around, I pray the Fed stays out of it, the Fed has done nothing but reinflate this market bubble. I'm sorry but kicking the can down the road has got to end NOW!! It sucks, I know but we are going to have to go thru the pain & the unfortunate thing is that all these lessons had been learned by our great great grandparents and we let our greed take over and get rid of all the safeguards that were put in place to prevent this from happening again. The US is going to have to go back to basics of inventing,producing and yes, taxing these CEO's that are making way more then anyone one person should while screwing their workers. We need a system like Japan where the CEO makes a certain above the avg worker and if he wants more then all the workers make more.

Jeff said...

Well said Anon's

Couldn't agree more!