[Against our own concerns that a stock-market crash is imminent, and that it will not wait until after the November elections, we must weight the obvious fact that we have plenty of company – perhaps too much company – in the chicken-little camp. In the think-piece below, Cam Fitzgerald, a frequent contributor to the Rick’s Picks forum, expresses similar, contrarian reservations. RA]

There is just so much talk of a crash that it has almost become anti-climactic. The thing is that with so many mutual fund redemptions having taken place and so many more 401-Ks being shifted out of equities, it does seem surprising that markets keep floating, range-bound. We obviously have our suspicions.  [Forum contributor Mario Cavolo] mentioned an article that suggested that as many as 70% of all stock-exchange transactions are being attributed to high-frequency trades. Off-hand I don’t know if that is true. However, I will say this: If such trades and the insiders (you know who I mean) who are doing them are artificially inflating the markets on very thin trading, and subsequently supporting each decline in contravention of historical norms, then it follows that the technicals themselves can be manipulated. 

I do not doubt this for a second. The number of times that we have all seen sell-offs end abruptly, turning on a dime, and key support-and-resistance levels fail to be reached, have been too numerous to be merely coincidental. What these episodes suggest cumulatively is that market intervention and manipulation are in full force. Meanwhile, there are simply not enough legitimate players remaining in the game to maintain balance in what now appears to many to be a rigged market. Moreover, there are just too many bears anticipating a crash, and too many taking short positions simultaneously. That tells to me that a gold mine of opportunity has arisen to profit off of paranoia, fear and greed, and that the few remaining participants will capitalize on the opportunity by driving prices as they choose, giving a moment’s hope here and a heartache there to make it all seem real.

 Paranoid for Good Reason

Of course, this does suggest collusion, but what the hell, we live in an age of reason and enlightenment, and our paranoia is actually pretty well-founded. Our doubts are not divined from tea-leaves and smoky incense anymore but from reams of data that can easily be interpreted by most investors. Much of it does look manipulated to the casual observer. It sometimes smacks of criminality under close scrutiny. In the meantime, those with short positions, salivating at the impending conclusion to more than 80 years of generally rising stock prices and expecting windfall opportunities in a sudden crash, will only find that they have been duped into having their investments eroded away gradually, day after agonizing day.

But there is always that hope! The second and confirming Hindenburg Omen was hardly conclusive, though, was it? Does that not give anyone pause? That it was based on a margin call is suspicious, to say the least. Enough to convince the uninitiated, perhaps, but not enough to provide a meaningful and solid marker that one could draw a final conclusion from. It was so close…just so on the edge.

Beware of Short ETFs

This game will likely play out for quite some time. Beware your 3X short ETFs, because they are certain to drain your funds while you await a stock market Armageddon that will not materialize in the way you imagine – i.e., with a drum roll, thunder, lightning and a deafening crash as stocks fall (tozero?). It’s not going to happen. Instead, imagine a long, agonizing meltdown that saps your energy and keeps you on the edge of your seat for months and months as you try to anticipate each move up or down. The psychosis of this market knows no ends.

Incidentally, we hear daily about this or that person of note who has sold “all” their equity positions to avoid collateral damage, and we all know about all the people who are bailing on the markets for the shelter of bonds, T-bills, Gold or old-fashioned cash. But I am not convinced this is the exact course that should be taken. And certainly no one should consider going all-in on any one of these unless we possess some extraordinary insights into the future that are immutable to all others.

Expect a Brutal Grind Lower

 This is still a market, so you should “play” it and stop-loss against risks on a daily basis. I do not expect a hard crash anymore – just a long, slow ratcheting down of markets where all the money is still to be made playing on the bounces, both up and down even though there may not be such volatile moves on most days. Aggravating, isn’t it? We want action! We want conclusions, and some out there desperately want a crash. (stop hoping — we are all losers on that bad day).

With so many shifting into short positions, holding and waiting, it is clear to me that this is just a sucker’s game. Active traders have the advantage now if they have the skill to see the pattern of daily and weekly bounces, but buy-and-hold shorts are in for a disappointing year. At he heart of this, I believe that the measures and the metrics used in technical analysis are under attack and are being subjected to outside forces that are skewing the reliability and the results that many depend on. Under the circumstances, there is likely a surprise in store for those depending on those results. So be wary, use your head, the aces are up to bat now and the bases are loaded.