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Most people were stunned when the market crashed right after a $700 billion bailout package was passed - but I was not, I was not surprised by it at all.

In fact, when I realized how quickly the economy was deteriorating on a day-to-day basis while the bill was being considered, especially during the second week of consideration, I predicted that the stock market would probably crash by the end of October once the traders put their focus back on the economy and realized what was going on. 

I turned out to be wrong (but I did see the crash coming ahead of time), the market started crashing almost immediately after the bill passed because that is when the traders switched from watching the politicians full-time on TV (C-SPAN) to watching the news items again.  As soon as they started watching the news items again, they realized just how much circumstances had deteriorated just in the days that they had been focusing on the politicians who were dealing with the bailout package - and then they panicked. 

A similar situation will happen again - just that the driver won't be a $700 billion bailout package the next time because such a huge bailout package won't happen again. 

How did I know what the traders were doing, i.e., that during the time the bailout package was being considered, they were watching the politicians, rather than the news channels that they normally watch during the day when they are on the floor of the NYSE? 

Because I have seen plenty of evidence over the last 10 years that they try to squeeze every last ounce of positivity that they possibly can out of every news item, no matter how good or bad the news item is - until a development comes along that has no redeeming value whatsoever, in other words the traders can't do what they want to do because there is simply nothing positive to get out of the news item (which will happen from time to time in current times because we have been in a bear market since 2000), and then they panic.  Since there was not much positive going on back when the bailout package was being considered (in fact, quite the opposite), they were focusing on the one thing that was going on back then that they could regard as positive, namely, the deliberations to get the bailout package passed. 

I knew, by the middle of the second week of deliberations, that $700 billion was probably not enough anymore (if it ever was to begin with), and so I knew that by the very fact that the politicians had dithered (which was inevitable, a partisan fight was inevitable, and it happened), the bill did not pass quickly enough to solve the problem and so it was inevitable that the traders would not react positively once they realized what was really going on in the big picture.

But even I did not bargain that the traders would realize it apparently within seconds after the bill was passed and start panic selling immediately.  I figured it would take them a little while to fully become aware of the situation first.  What apparently happened is that the economic situation had deteriorated so thoroughly by then that all the traders needed was a hint of it to realize the scope of the situation and so they decided right away that they did not want any part of it.