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The Most Dangerous Words on Wall Street: "The Crisis Is Over"

Posted Aug 26, 2009 10:30am EDT by Aaron Task in Investing
Related: ^DJI, ^GSPC, SPY, DIA, QQQQ, ^IXIC, UDN
Add today's durable goods number to the growing list of "better-than-expected" economic reports that have convinced many market players, economists and regulators the worst is behind us.

But such complacency about the crisis being over is "one of the most bearish things in the marketplace right now," says Todd Harrison, CEO of Minyanville.com.

As a trader, Harrison is short tech via the QQQQ with a 2% stop -- even as he concedes the S&P could rally another 10% without breaking its long-term downtrend. But he believes 1120 represents the likely upper limit of the rally off the March lows and that a major comeuppance could follow.

How major?

Harrison didn't use the word "crash" but makes analogies to 1929 in the accompanying video and says "the conditional elements for a downside dislocation are in place, particularly given that everybody thinks the government has backstopped the market. That is a much higher risk than people are assigning."

He is particularly concerned about a "seismic readjustment" of the dollar, as we discuss in further detail in a forthcoming segment.  

The good news in this otherwise grim outlook is Harrison believes "generational opportunities" will emerge for those who prepare for what he believes will be a prolonged period of socioeconomic malaise that, rather than ending, may have only just begun.

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