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Stock Market Crash Shakes Market Credibility

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While psychology is amorphous, it's paramount to our increasingly fragile global construct.

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There are alotta smart folks out there trying to finger the culprit behind yesterday's Scary Mary 1000-point drop. I scribed a pretty detailed vibe that was supposed to post last night when out of the blue, I got a call from Bloomberg asking me to appear on their "Crash Special" at 6pm. "I'm wearing jeans, sneakers and a tee," I said as I rubbed my fingers through my disheveled hair, "and I haven't shaved this week." "No worries," was the response, "come on over!"

I've got mad respect for Bloomie -- I've said it before and I'll say it again. When it comes to the integrity of mainstream financial content, they're best in breed from where I sit (and Minyans know my opinion has never been for sale). Long story short, there are certain things you don't say no to (peanut M&M's, a back scratch, Petty tickets, the top dawg at Bloomie TV) and the article that was set to post -- and the attendant traffic, which woulda been snazzy -- was pushed to this morning. Here it is, for those who care about such things.

Of course, it may be as simple as a five-pound former kitten. As posited early Tuesday morning:

The Crash Index! In mid-January, "Crash" the cat was adopted and the S&P dropped 5% in three short days. This morning, "Crash" went to the vet for his 'snip & clip' and the market is responding in kind. Coincidence? I think not...


Yesterday afternoon, as the schvitz hit the fan, we offered the following vibes:

If we rip rally higher tomorrow after "Crash" returns home, we may have to throw that young lad a parade. The "Crash Index" will secure a spot alongside the Sleep-O-Meter, Out-of-Office indicator, First Move-False Move (after the FOMC), contra-hour, and Turnaround Tuesday in the Nonsensical Idioms That Actually Work Hall of Fame.


I kid you not, when I walked into my apartment, the S&P futures were off five handles; this morning, they're indicated up eight (don't blink). It -- and, by extension, he -- is a bit freaky but then again, he's mine... are you really that surprised?

Some other top-line observations, in no particular order:

  • The nuts and guts of my "what, why and how?" column? It doesn't matter, the market, by definition, crashed yesterday. It stopped working. That brings to bear credit of a different kind -- that of credibility -- which we've long maintained is the issue at hands for markets at large. While psychology is amorphous, it's paramount to our increasingly fragile global construct.

  • With the pre-market S&P futures "in and around here," (up 8 handles) the easy trade today could be the first fade lower. From there, there will be a LOT of noise; if (and this is the biggest IF of the year) Hoofy and Stella can't get their groove back by midday, it'll set the stage for some late-day rage (if the markets trade free, of course).

  • I heard some pundits proclaim that yesterday was a capitulation with the Dow down 1000 and the VXO spiking to 40+. Silly rabbits; nothing traded down there and what did trade will be taken off the tape. That's not capitulation; capitulation is when you know you're selling in the hole and you just don't care.

  • Overnight sovereign spreads were -- anyone? anyone? -- wider, by and large, with double-digit widening from Denmark to France to Ireland to Sweden. (But you're wearing Lederhosen?)

  • Lest you had any doubt politicians and speculators are in an all-out war, check out the 'tude of German Chancellor Angela Merkel, who offers "speculators are our adversaries" and "I am firmly resolved--and I think all my colleagues (read world leaders) are too -- to win this battle."

  • Watch the financials: Goldman (GS) ($150 is the level), JP Morgan (JPM), Deutsche Bank (DB), and Bank America (BAC) should help shape the tape.

  • A sharp Professor shared that NYSE-Euronext (NYX) could benefit from yesterday's events; if we're heading "back to basics," the old school institution could well see some gains. Interesting thought; see? Good karma (in the form of NYSE Money Sense) comes full circle!

  • I'm back to Bloomie TV today at 10:38 EST. Don't they know I have a face for radio?

  • I'm hearing from a LOT of Minyans who still haven't heard back from their online brokers where or not their orders "stand" from yesterday. Once upon a time, "uncertainty" was unequivocally bearish; keep that in the back of your crowded keppe as we together find our way.

  • Please join our Facebook Page, point your mini-Minyans to Minyanland and sport some critter garb proud (or pick up some Critter Bobbles!). Not sellin', just telling; the first two are free and critters tees are an eye-popping ten bucks each!


And Finally…

Today is the last day in our midtown digs before we move to the fifth iteration of MVHQ. Fokker and I started in a single room at 399 Park Ave, the critters moved to a small cubby on the 10th floor of 800 Third Ave (Fish, Bill Meehan, and myself), migrated to the ninth floor (a larger space, where we spread our wings) and shuttled to the third floor, which we've now effectively grown out of.

Starting Monday, for the first time in nine years -- since those fateful downtown digs -- I'll no longer be a stone's throw from Chez Harrison. Park Avenue South here we come; the next phase of the critter craze. Thank YOU for being part of our journey; we aim to make you proud.

Good luck today.

R.P.

Position in S&P

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at todd@minyanville.com.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

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