Tim Sykes: We now interrupt your regularly scheduled vacation to bring you this important information–the US markets are going to get absolutely devastated tomorrow Tuesday January 22, 2008.

With European markets currently down 7% this MLK Day on US recession fears, just how badly will the US markets drop on US recession fears? Who knows and who cares, the key is that finally all these over-leveraged, over-greedy, overly-naive financiers, house flippers, wannabe Wall Streeters–all these idiots are going to be wiped out and everyone will have learned an incredibly valuable lesson: there are any ways to make money in the short-term, but if you take on excess risk, get too greedy and fail to understand how prices can reverse when there’s too much dumb money, you will inevitably get slaughtered.

The problem is our fascination with money and with that comes a sense of urgency. That sense of urgency makes years upon years of studying market behavior and business history not worthwhile to most and this is why I have dedicated my life to helping teach people responsible financial speculation. You see, when we look back on this crisis, over-speculation will no doubt be blamed and all financial speculators scorned.

But this is where everyone will get it wrong: the problem is dumb financial speculators, they come with every generation who mistakenly believe “this time is different”.

Maybe I’m wrong, maybe the Fed will have some emergency cut and we’ll all be saved and the dumb speculation will continue unabated. But I truly hope not.

In either case, this is where my trading strategy really shines, since I have no positions or expectations, I can come into the market tomorrow completely rational, whereas everyone else will be panicking. This is just like 2000, I didn’t predict the crash, I just didn’t have any positions because my charts told me there weren’t any opportunities. Learn from all the successes all detailed in my book and DVD, the key is to be able to wait for these kinds of opportunities.

As for how I’m going to play this crash, well, I’ll be traveling tomorrow morning so I’ll mist the wild open, but dip buyers, be very careful coming in, when you have losses of this magnitude, a lot of stuff is going to go wrong, so expect the very worst and you’ll be better off. I hate buying dips and crashes–they’re just not as predictable as buying breakouts or short selling break downs.

Buying into a down 7% market is usually wise, but since we’re going to crack huge support at 12,000, don’t be surprised to see down 10%, down 15%, down 20%. It’s a long shot, but here’s to long shots–in the 1987 crash along with 9/11, we rebounded pretty much right away. Like Lawrence Tynes missing 2 easy field goals and hitting a tough one to put my Giants into the Super Bowl, the third time is often the charm.

C’mon big crash, let’s create some trading opportunities!