Back on October 9th 2007, two days before the DJIA made an all time high, I posted a piece called Bull Fish examining the excesses of the bull feeders at a time when the market was chasing prices up with the same intelligence that it is currently selling prices off, little. While there have clearly been dynamic disruptions in the mark to market aspects of debt paper and subsequently real financial hits as well as a loss of confidence in some financial business operations, the bear has completely been consumed with a reasoning which dismisses the massive monetary intervention taking place. Betting against the Fed's ability to regulate this current weakness with a Fed Chairman who will spare no efforts in avoiding having his name next to a historical footnote which reads ' see Hoover', is a tactical blunder.
The break has now become a media event hyped with the same market format hysteria which drove the bull side crap for years. Investing in down has become a marketable strategy in an environment without any confidence in presidential leadership or the stewards of brokerage and banks. Anyone with any significant professional trading experience will tell you that big down pays off much quicker that big up. Having been left with idiotic strategies which could not cover any meaningful downside risk in a sub prime environment, hedge firms and big brokerage have moved to quick adaptive sell side strategies. This is not to be conspiratorial, rather strategies have emergent characteristics which lend themselves to be adopted by everyone as was clearly demonstrated when all ended up with the same sub prime calculated risk formulas.
Just as a significant segment of professional managers misread the structure of market price value earlier, we have entered a price trap scenario where the price liquidity could be tenuous for those needing to cover. This is not the beginning of a new bull phase but a mechanical reaction triggered by the velocity of preposterous positioning.
