You’d be an idiot to use this morning’s drop at the open to claim victory for the doom and loon crowd.

But then again, no shortage of doomers on the net trying to cash in and make a buck on the same quirk of human nature that will back a freeway up for 20-miles over a fender-bender.

Yeah, that’s right:  lookers and gawkers, loose-lip talker and doom stalkers all have this quirk and it’s part of the programming of Americans who watch too much television, have allowed high information density to substitute for clear thinking, and all the rest.

If you’re not spending at least two hours a day, completely media-free, you are snagged in their great psychological experiment as an unwitting victim.  Turn off the noise.  Center.  Think.  Quiet the mind.

That said, yes the market may decline from sometime late this month to after the September Fed meeting, but the reason for the drop-kick out of the bucket this morning will comes down to two simple economic realities.

1.  The Calendar

You no doubt have already bookmarked the Options Clearing website’s calendar over here, but in case not, it explains a lot of market monkey-motion.

Go ahead, take a look:  Today is index option expiration and tomorrow will be equities option expiration.

Now, suppose you are a big trader and need a little summer scratch to rent a joint in The Hamptons for a couple of weeks.  You know – like that little $100,000 for two week rental that the mindless wiper got.  How would you go about it?

Well, you would collapse index options as far as you could (say down 100-150 on the Dow, or more) today.

Then, tomorrow, when you actually need to deliver the equities (in the index) you would run things back up, pocket the spread, and maybe go up to the park at Montauk as long as you’re that close, anyway.

So much for reality #1.  It’s note quite that simple (more people are involved, but that’s how the mechanics distill down in simplified terms, the only kind I can deal with at this god-awful hour.

2.  Doomsayers have large market shares.

Being a realist, and working both sides of the street , doesn’t make anyone a pile of money (except they do OK in their own accounts).  But the doomsayers do really well, though most of them make more money scaring subscriptions out of people than they make trading.

Still, here are two reality checks that I use to get a sense of where markets are.

The first is a chart of the gold ETF GLD compared with the S&P 500.  As you can see by the chart, either a) gold has more downside ahead or b) the S&P could rise a fair bit.

Second is the price of Bitcoins is back down to $235 this morning and I have yet to read any doomster apologizing for poor advice when they were screaming “to the moon” for Bitcoins when they were at $800.  I will match my February 2014 analysis of Bitcoin (and the follow-on in September of last year where I explained “demand crumple”) with any of the Bitcoin hype that was wasted your personal bandwidth.

Sure, the doom promoters will tell you how Bitcoing ATMs are going into Greece.  It’s all true. 

But how many of them will tell you (as Paul Harvey used to say) The Rest of the Story?

The rest is that Greeks (with an Onassis exception or two) aren’t particularly good at finance.  The Greeks have just been scammed out of owning their own central bank by the megalomaniacs of the ECB for a paltry $10-billion and some paper.  A country dumb enough to sell its financial autonomy down the road that cheap will put in anything including Pachinko machines, if it will put a meal on the table.

The deal for the ECB is roll-ups of central banks and if this means bringing in hordes of Muslim immigrants from Africa to pad and distract, well, WTF?  Right.  Jeez people are blind.

When I tell you that “End of the World” is not coming until the end of 2016 at the very earliest and more likely 2017 mid year more likely, I am deadly serious.

A long-time reader who’s a  real deal fixed income trader sent me a note yesterday explaining in some detail how I might be wrong on the Fed raising in September and how QE4 could be the real plan instead.

Bingo!  I love smart readers!

But later on this morning (when I acknowledge he’s right and the bonds do tend to lead and the TNX ain’t exactly heading skyward yet, which does hint more toward QE-4) the trading fact of the matter is that QE4 or Hike (sounds like a football huddle, doesn’t it?) we hard core realists will likely skin a few more shekels from the doom-screamers.

I should be thanking them, I ‘spose.

imageOh, they might be right.  As asteroid could land in the Pacific in the next 2 1/2 minutes and we get a global coastal event, and the brightly colored charts may become real, but in my work, there is a semi-cyclical pulse to the market that we don’t talk about outside of very often.

So while we expect the Big German Bank Blowup to be a major story at the end of 2016, the end of the world seems more likely after we complete an irregular high flat IV and finish super cycle V up.   

That final up thrust may turn out to be a truncated V…but the doomers who pointed out x-teen Hindenburg Omens wrong and have failed to mention the Baltic Dry Index is holding over 1,000 may be guilty of cherry-picking the bad news in order to sell something.  We don’t do that.

Singular aberrations is not what matters in markets like this.  What matters most is the holistic approach.  And I’ve been in cash now for what, seven weeks, is it? It’s all about the numbers and the preponderance of those those, not a cherry-picked number of the day. I get one for scare-mail from a ‘former CIA analyst” and I’m gonna puke.

Come 2016 (late) or 2017 and maybe as late as 2018, if you want to come view the dust bunnies under the bed, the rest of us who try get things right ahead of time will see if there’s room for you.

Dow futures are down 125 but like I said, the deal today is options, and if we bounce tomorrow (or a bigger drop, depending on how commercials play it) then gee, don’t look surprised.

The facts of the day are simple as ever:

  • The Democrats not longer have a leading candidate, not when SHE ain’t fessing up on the emails and phones and is off at a $50,000/week vacation home.  Of the people my butt.  Aristos at play.
  • The economy is flat lined (more details in Peoplenomics this weekend, but retail sales data doesn’t discount for the huge increase in Fed money printing)
  • And The Don looks like he’s getting more traction and as this becomes apparent (that he really might turn America around) then business confidence will grow and the lefty/socialists who call the shots through the mind-control “foundations net works” will get afraid that America might rediscover her greatness.

So look for lots of demonstrations and distractions while the battle writ large is played out.

From out in the East Texas Outback, the world still looks as insane as ever this morning, but if you’d be more comfortable with distractions, we will go back to that old crap tomorrow.

This morning, just some hard reality over the third cup.  It may not be what you want but it may be what you need.