The recession is underway. The US economy shrank by 0.3% y-o-y in the third quarter. Adam Lass says politicians need to accept the truth and allow the economy to correct itself. Only then will stock markets genuinely recover. When they do, some investors will make a fortune. But to survive until then, Adam says it is essential to buy put options on weak companies.

More from Taipan Daily:

Pay no attention to the Fed announcement: Durable Goods is where the real news is hiding!

I have a confession to make: As I sit to write to you today, I don’t know what the Fed will do regarding rates. And, quite frankly, I don’t really care.

The reason I don’t know is because the deadline to send this missive in to all the fine folks who convert my barely legible scrawling replete with misspellings and grammatical errors into beautiful typeset columns is right about the same time that Mr. Bernanke will be stepping up to the podium.

I could make some educated guesses. The Fed will most probably cut either a quarter point or a half point. And the market will either go up or go down a couple of hundred points. Probably both, actually.

But so what? Quite honestly, I am not even watching my newswire. By the time you read this, we will both know the answer to that question.

The Real Deal

And like I said, it’s not even the most important bit of news floating about out there this week. After all, Washington has been pouring billions of dollars into the economy almost every day. What’s a few billion more between friends?

Rather than focusing on such ephemera, I’d like to draw your attention to something really important… buried deep inside the body of the latest Durable Goods report, fresh off the government printing presses.

Let’s be careful here though. As with most government documents these days, the top-line items are rather deceptive. They speak in glowing terms of September’s 0.8% month-over-month increase in items lasting more than two or three years sold here in the U.S.

How to Turn Wall Street’s Pain Into a Quick 146% Gain!

While current market conditions are treacherous for naive “buy and hold” investors, a small group of smart folks are converting the market slide into gains of 251%… 307%… even 387%… week in and week out… no matter how far the Dow falls. Here’s how you can join them — free — for a full six months!

Put Away the Champagne (at Least For Now)

Now, in normal times, a wan increase such as this wouldn’t even be worth announcing. Heck, we don’t even know for a fact that it happened, as it is so small as to be within the margin of error for most studies of this nature.

But when one places this 0.8% gain against the background of August’s devastating 5.5% decline, one might be inclined to share in the Commerce Department’s joy.

I hate to be the one who is always telling you to put away the champagne. But someone has to be the designated driver, as it were, and more and more these days, I find myself in that role (both in my business and personal life).

Digging Down to the Truth

When one digs beyond the headlines, one discovers that the vast majority of these Durable Goods gains are neither durable nor gains, nor are they really good.

Rather, they are almost entirely in the transport column of the report. Demand for commercial aircraft shot up some 29.7% in September. This is bad for two reasons.

The increase is accounted for by a relatively few number of actual orders received by Boeing, et al, not planes delivered. No wrenches have spun, nor have any welding torches been lit. No checks have been written, let alone deposited.

And it is quite possible that none ever will be. These are promises against the future, a request to get into the queue – as easy to cancel as to make.

The Real Danger…

However, the real danger here is that a spike one month in aircraft orders is almost never matched the following month. This means that the same report, which is supposed to lift spirits today, is likely to crush them in some thirty days.

It’s really best if we just ignore this volatile sector entirely. Unfortunately, when you take transports out of the equation, Durable Goods actually fell 1.1% in September.

To make things worse, the most genuine “leading indicator” to be found in the report – orders for non-defense capital goods – fell some 1.4%. This is the second month in a row where this category came in washed in red.

Which leads me to the most genuinely germane fact we can possibly uncover this week…

My One Real Hope!

On Thursday (the day you read this), we will receive Washington’s official summation of the overall economy for July through September. Now, you and I already know that we are in a recession. The real question is, will Washington finally accept the truth of the matter?

Will Washington finally stop cheerleading for the fiscally defunct and philosophically debunked “permanent boom” and, instead, man up and accept the reality of the facts on the ground?

If they actually give up the fantasy and move on, cut off the dead limbs, allow bad companies to fail and good ones to gobble up their cash and customers, etc., etc., then – and only then – would we have a genuine buying opportunity for beaten-down stocks.

Quit Crossing Your Fingers and Roll Up Your Sleeves

In the meantime, you are faced with some choices.

You can sit and wait for the Fed to bail you out by cutting rates to nothing, so you can use worthless dollars to buy worthless shares of worthless companies.

Or you can conserve your capital against the day when cold hard reality is finally accepted in Washington (and on Wall Street) by buying puts against the most worthless of these companies.

Okay, those of you who are not interested in hearing about the gains you could have made should stop reading now! Because in Tuesday’s issue of WaveStrength Options Weekly, I announced another nine fresh new max highs:

1. MET Puts: 297%
2. PX Puts: 486%
3. SHLD Puts: 281%
4. WHR Puts: 388%
5. QCOM Puts: 186%
6. FDX Puts: 97%
7. AVY Puts: 23%
8. CTAS Puts: 39%
9. RHI Puts: 60%

Normally, I would not tip my hand as to what my subscribers are playing. But I really want you to understand the power of this technique in dark times like these. And I am willing to give away a look at our cards IF it helps you to that realization.

Someday, stocks will go back up. Maybe even someday soon. And when they do start to climb, many new fortunes will be made. But in the meantime, whether you pay me to show you how or figure it out on your own, you simply must add this tool to your arsenal if you wish to arrive at that critical moment with your cash intact.

Source: The Government’s Latest Sucker Punch