DANGER ZONE

After getting back I have spent some more time going through some things and the more I look at this the happier I am that I was not an aggressive buyer today. Look at some of this stuff.

The ABX index plummeted today.
http://www.markit.com/information/products/category/indices/abx.html

The TED Spread surged today
http://www.bloomberg.com/apps/quote?ticker=.TEDSP:IND

Fleckenstein and Calculated Risk talking about the credit market trading desks drying up.
http://calculatedrisk.blogspot.com/2008/06/credit-markets-its-never-been-this-bad.html
I have said this several times but probabilistically this has got to be the highest you will ever see for a market crash. You do not make money trying to bet on them over the long term so I am not placing any bets on an extreme move in the indexes. All I am saying is that where as 2 years ago the chances of a market crash (I will arbitrarily define as a move down in the major indexes of over 10%) was maybe 1%. Now it is maybe 20 to 30%. This crash could be triggered by many things. One of them ironically could be a crash in the material and energy names. If investors perception of this names suddenly shift they have a long long way to fall. Another would be yet another major blow up at a bank.

Things do not look good and as noted earlier there was no panic to cause me to want to initiate strong buying. Things are just sick out there. I was in an outlet store today where I know the store manager and she said sales are down 20%. Main street is as sick as Wall St.