Stock Market Crash is Imminent

Folks, the last 30 minutes of ugly action in the indices on Friday was not an aberration. It was institutional selling and in heavy doses. Too many factors are stacked against the stock market, US economy, and cash liquidity, that no amount of hope will pull us out of this. The past few months have been fueled by hope. Hope that the FED will somehow rescue the markets and the economy. It was fueled by the hope that we would not plunge into a recession that should have continued from the 2000. The false hope of artificial rate cuts by Greenspan and Bernake to spur us from the inevitable downward spiral from the dot com bubble and the 9/11 attacks have to be paid in pain and reckoning. In truth, there is no Shawshank redemption for us. We must now accept the pain and pay the Piper. It is overdue.

For too long, the market was content to ignore the danger signs hinting at disaster. I too played the "long" side from August to October 21, 2007. I am a momentum trader and trade on the side of strength. But I was ever watchful of the economy. I also erroneously called for FED to cut in late August because I believed that rate cuts would save this economy. But the realization that this was naive started back in March of 2007 when subprime fungus clearly began firing off warning signs.

Today, we are seeing "safe" financial institutions writing off billions of dollars in bad debt related to subprime exposure. But the ominous truth is that they are low balling the figures, just to stay afloat. But the dank cover of deception is no longer viable and institutions such as Wachovia, Merrill Lynch, B of A, and JP Morgan are fessing up.

No amount of FED intervention in the form of rate cuts will save us now. The investors have realized this sobering truth. It is apparent in the Nasdaq's 6.5% plunge this week. It is evident in Cisco's conference call that no one will escape this without battle scars. Tech was a safe haven for too much money chasing too few stocks. Witness the darlings Google, Bidu, Apple, Research in Motion, etc... coming down from stratospheric highs. I know, I was part of what drove up these stocks for the past two months. But I knew that it was temporary.

If anything, the FED will be forced to raise interest rates in the next meeting. He knows all too well, the fight in saving this economy is over. It is inflation that he will focus on. When the cost to lend money exceeds profits generated from doing it, the FED (which is a bank) will be forced to raise rates. The gesturing by the FED officials the past few weeks is not a coincidence. They are trying to ease the markets down. But because the market is a conglomeration of mass psychology, there will be no easing down. Only a swift and bitter correction awaits us, and I believe a crash is imminent.

I wrote in March regarding the shroud of lies that Countrywide Financial (CFC) was operating on. I knew that they were the harbinger of things to come. That no one is clean in this mess, all are to blame, including the consumers. But the day of reckoning is near. I do not have much hope for the near term future.

You can forget about the Santa Rally or the Turkey Rally. Santa is working at McDonald's this season to pay for his ever rising mortgage interest rates. The turkey was shot early this year by the angry stock market participants. Don't buy into buying the dips. They said this in 2000. If you listened to them then as they say so now, you will go broke. Go to cash.

Good luck. I am heavily short BIDU, AAPL, and will continue to short on any strength.