The way things are unwinding, you wonder if the 2002 bear market lows at 775 will hold down the road. Heaven help this market if we do lose 775. Any number then becomes possible. We could rally first. We could not but the action in the leaders is screaming here with the way this market closed in the last 20 minutes. Nothing short of leaving one breathless and speechless. It shows the power and force of this bear and what's still possible. We have witnessed the unthinkable. We may witness a whole lot more of that.

This bear is rocking folks and we need to respect it. The best answer to it may be all cash and some shorts as they present themselves and nothing else. It may just be that long side plays just won't be in effect for quite some time. Pure technical analysis is not working. The best divergences I've just about ever seen, including the daily chart divergences, are being ignored in ways I have never witnessed. It is interesting for sure. The most guaranteed patterns are failing. if you study the daily charts here you'd have to be nothing but long. Heavily long. One could make a case of almost being margin long yet look at the market behavior. Folks, those daily's are screaming buy, buy, buy. The market  is laughing. The bears are rolling on the floor watching those buy signals get destroyed. They're saying for years and years all the market ever did was go up. They're saying we know how everyone laughed at us for so long. That all anyone thought was the market could only go higher. It sure did behave that way. I personally remember one colleague telling me in late 1999 that the Nas would never stop going up and that soon it would be higher in price than the Dow. Uh, no!!! The bears are saying forget it folks. We must respect that message, like it or not.

Listen, no need to keep harping on the obvious folks. We may end up being cash for months with some shorts from time to time. Be prepared for that. If that doesn't satisfy you I understand. it won't change what we do. We've done too well throughout this bear to get aggressive and then get crushed just because we're seeing some buy signals that just don't work. You look at Aapl. You break it down below 94 and then shoot up two days straight only to watch it collapse late day today. The pattern is on complete breakdown now. Aapl is just the tip of that iceberg. We need to be in total defense mode from here on in until things flush out or there's action that suggests things really have changed for the better. The declining 20's stopped every rally today. The key is declining. It looks like the market is heading for a triple bottom breakdown. Nothing is guaranteed but the market looks like it's heading for a major breakdown soon based on the last 20 minutes of action today. Hold on to your hats. Feel good about missing the whole bear and we will guide you through all of this.

Peace

Jack

 

The way things are unwinding, you wonder if the 2002 bear market lows at 775 will hold down the road. Heaven help this market if we do lose 775. Any number then becomes possible. We could rally first. We could not but the action in the leaders is screaming here with the way this market closed in the last 20 minutes. Nothing short of leaving one breathless and speechless. It shows the power and force of this bear and what's still possible. We have witnessed the unthinkable. We may witness a whole lot more of that.

This bear is rocking folks and we need to respect it. The best answer to it may be all cash and some shorts as they present themselves and nothing else. It may just be that long side plays just won't be in effect for quite some time. Pure technical analysis is not working. The best divergences I've just about ever seen, including the daily chart divergences, are being ignored in ways I have never witnessed. It is interesting for sure. The most guaranteed patterns are failing. if you study the daily charts here you'd have to be nothing but long. Heavily long. One could make a case of almost being margin long yet look at the market behavior. Folks, those daily's are screaming buy, buy, buy. The market  is laughing. The bears are rolling on the floor watching those buy signals get destroyed. They're saying for years and years all the market ever did was go up. They're saying we know how everyone laughed at us for so long. That all anyone thought was the market could only go higher. It sure did behave that way. I personally remember one colleague telling me in late 1999 that the Nas would never stop going up and that soon it would be higher in price than the Dow. Uh, no!!! The bears are saying forget it folks. We must respect that message, like it or not.

Listen, no need to keep harping on the obvious folks. We may end up being cash for months with some shorts from time to time. Be prepared for that. If that doesn't satisfy you I understand. it won't change what we do. We've done too well throughout this bear to get aggressive and then get crushed just because we're seeing some buy signals that just don't work. You look at Aapl. You break it down below 94 and then shoot up two days straight only to watch it collapse late day today. The pattern is on complete breakdown now. Aapl is just the tip of that iceberg. We need to be in total defense mode from here on in until things flush out or there's action that suggests things really have changed for the better. The declining 20's stopped every rally today. The key is declining. It looks like the market is heading for a triple bottom breakdown. Nothing is guaranteed but the market looks like it's heading for a major breakdown soon based on the last 20 minutes of action today and the potential for that triple bottom breakdown. Hold on to your hats. Feel good about generally missing the whole bear and we will guide you through all of this.

Peace

Jack

The market is not acting as if it's ready to break down. A good catch by the bulls at the very bottom of the current triangles. I mentioned last night that the daily charts were strong and thus it can come as no surprise that we were higher today. It's so easy to say that the past two days spell doom for the markets but those daily's, being as strong as they are, were able to stop the bears from breaking this market down right at the bottom of those back and forth triangles. It suggests the possibility of a very decent move back up to the top of those triangle's if not higher over the next many days and weeks. In this market, that is no guarantee but the 60's, which were nasty most of the day, did improve some late and if those Macd's on the 60's can cross, and they're close, then this market will be able to move to the top of the triangle's. Those levels are decently far away and that would create a real buying opportunity for the short term. Those  levels being 980 Sp and 1740 Nas. If the top of the triangle's were to be taken out, then you're talking once again about moving to the 50's which are normally visited during a bear market but have yet to do so in this one. It's declining rapidly to meet price so it's not out of the question. 1049 is the current and steadily declining number on the Sp 50 day exponential moving average and 1886 is the number on the Nas. I know those levels seem like an unattainable dream but if we get those 60 minute crosses it's possible folks. The top  of the triangle's at least and maybe more. Monday will be a huge day to see what this market has got in it from a near term bullish perspective. If nothing else, those daily Macd's are far too bullish still to be thinking shorts.

There were some elements to today's rally that didn't sit too well with me in the form of much lighter volume on the rally and once again, the leaders refusing to participate. Aapl, Goog and a whole bunch more you all know by now were either red for the day or barely green. The fact that most if not just about all of them are also at the bottom of their triangle's, it is possible that they will begin to participate on the long side starting Monday. The Nas volume today was 500 million shares lighter than the down volume from Thursday. Not exactly the type of confirmation you're looking for when thinking a move to the top is possible near term. Through the years I have found that the single most important elements in technical analysis are the state of the daily Macd's and the type of volume the market is displaying. The daily Macd's are powerful but volume trends aren't great thus we have a standoff there. If I have a standoff such as this I usually defer to the daily Macd's as the final decision maker and thus I do think it's more likely volume will start to improve early on next week and that the markets will move higher. The final bug in the ointment today was an inside day was printed on that lighter volume. A day where the upside candle sticks traded within the larger downside candlestick from Thursday off a nasty two day move lower. Often the trend will continue which was lower previous to the inside day but once again, I have to defer to those daily Macd's as the decision maker. We shall see on Monday for sure.

When a market wants to go higher, there is no news out there that can adversely affect the action to come for that day. The market was near breakdown and the employment report was nothing short of horrific. Every excuse was there for the bears to crush the market but after the futures fell for a quick moment, they recovered quickly and the buying was on for the day. Late selling came in which took down much of the gains but with fifteen minutes left the bulls came in and ramped the market in to the close allowing the indexes to close at or just shy of their highs for the day. The employment report was worse than even the most pessimistic prognosticators had forecast. Didn't matter because those daily's said it was rally time and nothing was getting in the way of that. It's never about the news. It's about where the market needs to go at any given moment of time.

The longer term is very unclear. How we might advance now and in the days ahead will tell us some of that story meaning how those oscillators behave but for now it's just too early to know how bad things may get down the road. In a market environment such as this you have to take things day to day. We felt shorting on this latest two day pullback was inappropriate based on those strong daily Macd's. You have to play what you see and stay cash for as long as needed when in these triangle's but it does look like there's a small buying window upon us. When we get to the top the market message will be loud and clear. Can we finally make a break that allows at least a 50 day moving average test or will it just quit? If we get the move to the 50's, what will the oscillators look like? We need to watch and learn from that whole process to determine whether the market has seen it's worst days or whether a lot more pain is coming down the road. It's very unclear at this point in time and I'd be wasting your time if I said I was sure about what was to come. No one knows but we will learn a lot over the coming days and weeks for sure.

Wfc (Wells Fargo) printed a nice candle today, closing well above its gap down low created by last nights news of needing to do a secondary stock offering in order to raise ten billion additional dollars above and beyond what the Fed has already given to them. It shows you how bad things really are in the credit world and for the banks. That news was bad for sure and it gapped down today and rightly so but the strong close is another sign that it's likely the market wants some real upside in the short term. The banking sector or the Bkx looks pretty good short term as well and maybe that's why it rose late in the day.  If the banks can rally near term it's very likely we get the move higher from here. Wfc a probable good tell for that rally coming up near term. Never a guarantee but that stocks action today does bode well.

Have a great weekend. Spend time with a child if at all humanly possible.

Peace

Jack

 The good news from today has to be the fact that even though we didn't make those 20 day breakouts on the Nas and Sp, we did have a fabulous advance decline line yet again. This was just about the story every day this week and the fact that it continues means most stocks are breaking out of old bad patterns and this is a huge plus for the market. Up to down volume was solid as well and volume continued better than average. All good signs and if this continues just a bit longer, the 20's will get taken out by the bulls and then we'll be talking about those elusive and impossible to penetrate on the first few try's 50's. If we ever got to the 50's it would be very likely that the market would suffer a very intense selling period shortly thereafter. Let's hope we can talk about that in the weeks ahead.  

There are some troubling signs from the past few days that need a quick talking about so as to be fair about the whole story. Stocks that need to perform as leaders are still struggling with the key stocks on the Nas being Bidu and Goog. When the market is truly powerful so are these two giants. They are struggling big time. Bidu crushed today and threatening to lose 200.00 support. it needs to hold here. Goog can't bid since its earnings report last week and it was a strong one so no excuses. Those two stocks are barometers of health and for now they are sick and need to get involved if the Nas is going to take out 1733. The banks are also under performing overall and without the financial's getting very involved it'll be more difficult for the Sp to make the move and have it stick. It's been failing because this sector can't get out of its own way. A must watch for the near term for sure. 

The market isn't making the big move over the 20's but it is at least hanging tough and there is something to say for that. Again, let me remind you that quite often, in a bear market bounce, the indexes hit the 20's and just give it up hard and fast. Not the case here but still no real success to talk about since the big move from early in the week which was nice but not enough. I do believe there's a solid chance based on the Vix daily that the market will make the move but there are absolutely no guarantees and thus the reason for how we're playing things. It was a great week for us with everyone making a lot of money but this game will take it from you in a heart beat if you take your eye off the ball. It has no mercy and thus it is essential we obey the messages and the message says nothing more aggressive until we clear those 20's or get a strong pull back from which we can enter. Let's just keep trying to do what we have been. 

 Enjoy life. Play with a child if at all possible. Have a great weekend. 

Peace

Jack

What an awful market. Yes, no question we saw a whiff of panic today with the strong move lower at the open and with the Vix going crazy reaching 89.53 intra day,  closing on a breakout at 79.13. Well off the highs but still on breakout. International markets were annihilated overnight on earnings headaches and our futures collapsed on that news. We gapped down and slowly recovered all day although there was the usual 1500 points worth of movement on the Dow. After moving all over the place and with the Dow getting within 125 points of break even with about five minutes to go, major selling kicked in and knocked it down to a loss -312 points at the close. The Nas was crushed as well, down 52 points and the Sp was an equal opportunity loser, coming in at -31. Absolutely nothing positive can be said about today's action. There can be some arguments made in defense of the bulls but I don't think they hold any water. I'll discuss that in a moment. There just aren't any buyers. Just short covering. Once that goes away the bears come right back in while the bulls aren't acting very bullish. They refuse to be buyers here. They have stepped aside. A true buyers strike and who can blame them really!!! Smart money is waiting for the right type of hammer to get involved and today was another day in which that DID NOT take place. End of story.

So what was that argument I just mentioned? It's the hollow candles that were printed across the board meaning we had a down day but on balance buyers after the gap open took place. Normally I would say that it is somewhat bullish no doubt and we can have a small rally here for a day or so. I don't think, however, that it was a bottoming hollow candle situation and here's why. When we truly bottom I think it will be clear hollow black candle meaning we will close up for the day. in addition, leaders will lead meaning stocks like Gs won't finish down 9$ for the day. In addition, we will see a huge positive on the advance decline line and once again we saw an absolutely terrible advance decline today. It was an average 3.5 losers to every 1 winner. Not going to be the way it needs to be at the end. Leaders will have huge up days after being down huge early on. You get the picture. Basically, everything we need to see was not there today. It doesn't mean those hollow candles won't offer up a little buying for a day or so but it doesn't even guarantee that. Should we go higher for a day or so, I'd be very careful about getting aggressively involved.

I will not argue with anyone who tells me that some stocks seem to be on sale here. There are so many wonderful stocks out there that have virtually no debt. Some have none at all. Those are the stocks we'll want to own and we're making a long list of those companies for when the time comes, even if it's just for a short term but significant rally higher. You need to stay away from stocks that rely on their payrolls, etc being paid by using credit from places where credit is no longer available. Those stocks are being shown no mercy here. I know no one is it seems but those stocks are being treated the worse. If you have high debt you're in big trouble with this stock market.

Folks, no one alive can understand with any reliability how low this market has to ultimately go before it reaches the bottom. It's pricing in the recession/depression. The environment is bad and seemingly getting worse as more and companies are forced to close their doors or lay people off. Unemployment is increasing rapidly and that will be felt in the months ahead. The market is trying to wrap itself around the concept of increasing unemployment and global demand destruction along with shrinking valuations for just about every corporation on planet earth due to a severe decrease in business. As things move along the market is taking it all in and pricing things out. Forget the nonsense you hear that everything is down too much. Yes, like I said, some stocks are clean and clear of debt but the majority are not and who knows what's fair value to the market. The market will tell us no matter how much those screaming heads tell us they know better than the market does. They tell us things are way over done. if they were, folks would have stepped in already. Smart money knows where to buy first and they aren't buying at this moment in time. That's all you need to know thus the market, in truth, IS ALWAYS FAIRLY VALUED. Whatever it's trading at is always fair value, regardless of what anyone else ever tells you to the contrary.

If were to be totally honest, we've had more situations where capitulation clearly took place. from the bull bear percentage to the the arms index to the put call ratio to the vix, etc. Add in new lows and high volume and the list goes on and on. None of it has worked so it is different this time. It happens. There's always that one market that says not this time. Not so easy folks. We have adjusted to that. There is one element that has NOT occurred yet. We have yet to see the market make new lows with a positive divergence on the Macd on the daily charts along with the appropriate hammer situation i have talked about to death. That combination has not happened over the past thirteen months since the bear market began and thus it's not a shock to say we haven't seen the market try to bottom. The elements are just not in place. When we get that magical combination, you can't be long enough. May live for that day. It's out there. Will it happen next week? Next year? I have no idea. I know we'll see it when it does takes place. It'll happen in the markets time, not ours.

Have a fun weekend. Play with a kid if you get the chance. Better yet, play with one and be a kid yourself.

Peace
Jack