The Storm Before the Storm

You knew that the retest of the open was beckoning. The issue is the Friday paralysis, like the paralysis we had that Friday before Black Monday in '87. We simply couldn't stabilize, and tons of stocks doubled their decline in the last two hours of that fateful pre-crash day.

You can't blame people. What good has occurred over these weekends? We have seen every collapse of note orchestrated "in time" for the Japanese market's opening, as if that has mattered.

Karen Cramer was giving me color of that afternoon -- the sizes of blocks that were for sale and the desperate attempts to get out before Monday -- and it made me think that it wasn't worth playing the waves up and instead just made it worthwhile to pick. The sellers were using lows well below the market, meaning that if Transocean (RIG - commentary - Cramer's Take) was at $65, they would say, "Take it down to $55, because it is going to $45 Monday." Not a great bottom-fishing scenario.

Incredibly, we have another wave of forced selling in the oil patch with hideous losses in the National Oilwell Varcos (NOV - commentary - Cramer's Take) and the Chesapeakes (CHK - commentary - Cramer's Take), which are so obviously driven by forced selling. You can never tell when that ends, as it's so like Nasdaq in 2000, maybe worse. These offer no dividends, so who the heck cares? Right? Without takeovers, these companies' stocks are totally at the mercy of the hedge funds.

Amazingly, all of this is just in the stock market. Unlike 1987, the real issue is in the debt market, which is still controlled by the Lehman collapse, and the only thing that can raise money is selling common stocks.

Fodder for hedge funds. Fodder for pension funds. Fodder for annuities. Fodder for insurance companies.

Do not be fodder.

Random musings: How incredible is this Apple (AAPL - commentary - Cramer's Take) buying, and how much do the buyers want to use that stock to rally things! ... I'm really worried about these annuities and the guarantees. That's the real issue out there, the real wild card.

At the time of publication, Cramer was long National Oilwell Varco.

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