More Collateral Damage.

Only so many angels can dance on the head of pin, but in the end you can only use so much leverage until it bites back. You can only deleverage so much without enough capital in the system before you get the kind of collateral damage we are getting this morning.

Just like the heaviness in the market prior to September 7 years ago, it seems as if the persistent selling and hitting of bids every time an upspike showed up this September was telegraphing this morning's turmoil.

Somehow, somebody somewhere wasn't minding the store as the ground has shifted in the last year, culminating in a fall event once again. It is an historic day and one can only wonder how the "culture" will change going forward, as institution after institution and industry after industry is caught in the grip of a 100-year flood and an echo of The Rich Man's Panic in 1907.

That financial crisis and panic played out over one year, from peak to trough.

Technically the market appears to be headed for a date with destiny, toward 50% of the 2002/2007 range near 1170ish S&P. However, a measured move counts to 1155ish and potential lower Head & Shoulder targets loom dependent on what happens in this very important time frame between now and the end of November.

The Street is shell-shocked as the audio and speed is picked up on this slow motion car crash we've called the equity market over the last year. Of course, Rome wasn't burnt in a day.

It's been like a swarm of locusts of speculators and vultures attacking the investment banks today. You've gotta wonder about the dovetailing of the removal of the uptick rule and the implosion of the financial weapons of mass destruction. You've gotta wonder why more deleveraging did not occur in 2008. You've gotta wonder about Wall Street executives telling us everything is ok. Is it a wonder we have a crisis of confidence? You've gotta wonder about the masters of the universe doing everything wrong.

Conclusion: The old adage "Surprises happen in the direction of the trend" is more than a cliché, as difficult as it is often to position as a for the payday. From the last pivot hight at 1255 S&P, 90 degrees down is 1220. 180 degrees down is 1185. 270 degrees down is 1150 while 360 degrees down is 1120.

I guess if you live long enough you see everything. Laissez- faire is not always fair. A blind man's alchemy of financial engineering and deregulation caused the dislocation.

It's hard to know where the damage is when leverage is involved. That was the lesson of my father's generation. The newspaper headlines are black with "Crisis On Wall Street."

Although it may speak to an interim low, there is no telling how things will play out when panic is in the air.

Translation: let the dust settle. Contrary for the sake of being contrary can mean getting into the tub with a toaster.