The stock market continues to look like it’s prepping for a meltdown, but if Friday’s tired action is any indication, we may get a chance to buy some puts next week before the plunge begins. To be sure, trading volume has started to dry up in advance of Labor Day weekend, and this can sometimes cause price volatility to expand due to the absence of liquidity. This time around, though, because of the market’s constipated directionless in recent months, my hunch is that the effect will be very muted if it occurs at all. A post-Labor Day plunge would not be unusual, since the September/October period is statistically the worst time of year for stocks. Even though this implies that a sharp selloff should not take investors by surprise, we shouldn’t expect contrarian sentiment alone to prop shares for much longer in the absence of any rational reason to buy them.

 Meanwhile, the issues we should like to be short – such flying bricks as Citi, Beazer and Google – have not been particularly easy to short, particularly via the come-to-papa bids we’ve been showing for put options. This suggests we may have to bid them more aggressively next week, even if getting in a little too early subjects us to a few days of discomfort. I’d much prefer shorting into strength, of course, but there hasn’t been enough of it to provide the kind of satisfaction we feel when we sell the peak of a two- or three-day short-squeeze.

Fear Factor

Concerning precious-metal stocks, I’m not convinced they’re ready to be goosed higher by whatever fear factor drives shares lower in the coming weeks, assuming the averages fall. In fact, mining shares have been moving sympathetically with a rising energy sector that itself feels overdue for a selloff. We’ll know soon, though, since October crude is closing fast on a hidden-pivot target just above $70 that I disseminated on Friday via an intraday bulletin. It’ll be seat-of-the-pants flying for us as the week unfolds, but our underlying objective will be to fill up the tank before this market runs out of gas.