Bloodbath

I'd like to point out a couple of things, for those thinking now's a good place to buy (and I wont mention Greece once):

1) You never crash from a top. You crash after you've bled and bled then bled some more.

2) We're 3 points off the Dow weekly 200ma and the futures are 50 under. It broke the weekly 200 in 2008, at exactly the same time as we are now, and it went from 11,000 to the sub 8000 in a couple of weeks. That too was also after it had already fallen a fast 2000 point drop (a bit like now).

3) The Dow 200 month average is 9750. That might be the first 'pause for breath' in this decline, although in 2008 it was straight through. Funnily enough, that level is the July 2010 low too. Sounds like a nice fit to me.

4) Dow 200ma and 50ma on the daily are both heading down. That's not good.

5) The smooth and fast rise up from the 2009 low provides very little support as we move down. It's free fall from a technical perspective.

6) PE's are low BUT, that's based on record earnings that are fading fast, particularly in the financial sector. If earnings drop 30%, then a 30% drop would be a good result....but we'll likely overshoot especially with such fear floating around. What's more it's not earnings per se pushing us down, it's liquidity or lack of.

7) Is Bank of America is going down? Web site crashed all through today. Was this too many people trying to pull cash out? 

8) Is Morgan Stanley in trouble? For the yanks, that's far too close to home for comfort.

9) China CDS's are shooting up. From no where, the worlds growth powerhouse is starting to stutter. Hang Seng was hit for 750 last night as realisation started to sink in.

10) Dexia (huge Belgium bank) is going down as I write this. Who exactly will bail out the banks this time? Gadaffi?

11) As we approach 20% off the Dow, all of a sudden liquidations will occur across all asset categories as margin calls are made on speculative long trades (including gold). The 'all the same' move will be brutal, as it was a few years ago.

If Jonga was here, he'd say i've been like this since March 2009. That's not true. I've been bearish since March 2007, and I have the blog to prove it.

I'll close on 5 reasons to be happy:

1) UK AAA confirmed. The austerity hurts, but it's doing the job.
2) We didn't join the Euro. Thank goodness. Merv et al have some control over our destiny.
3) We still have huge coal deposits. How long before we re-open the industry and become energy self sufficient? Not long (buy UK coal?)
4) The sun is delaying the 'leaves on the line' delays. Hooray.
5) New lows (below March 2009) will provide us with a great buying opportunity.

Market Bear
@market_bear