Weekend Analysis for Fri September 12th 2008

About this market. What is there left to say about this market that hasn't been said day after day for the past two months since the market bottomed on July 15th. That's the day the Sp saw 1200 and has held all attempts to break below that critical support level. Two specific attempts that saw lows of 1217 and the other day at 1211. The move to 1211 occurring in the face of some real horrific news that one would think would have been the catalyst to make the breakdown. Not the case by any means. The bears will say it's fine that we haven't broken down yet because the market fell so much from October to the July lows and now it's just basing before the next leg down ensues. That is a very valid argument. Often when a market is down so heavily in a relatively short period of time, it'll rally some and put in a multi month bear flag before the process starts all over again. The bulls will argue that you have to feel good about such small losses in the overall market in the face of such horrific financial news from day to day. Unprecedented bad news with Bsc already gone and more to follow with such names as Wm, Leh and possibly Mer and Wb. With such news the bulls would say it's a miracle we're not at Dow 8,000. They feel good the market has seen all of these disasters to such big name company's and yet nothing more than a big yawn.

So now the bulls and bears have made their arguments but what has happened thus far that's pertinent to thinking about what's next. It's undeniable that Aapl, the number one leader in the Ndx, has broken down below its multi year trend line. Bearish. Rimm is threatening to do the same. Bearish. Goog and Bidu are long broken. Bearish. In other words, the big four are all broken. Not just broken but truly annihilated technically. Bearish. Keep in mind that these breaks are just occurring thus it's not appropriate to think they'll just turn around. That's extremely unlikely. Not only that, but the breaks are now deep in price. Even a strong move higher in any of these stocks would not take it back to a healthy state. The semis are broken. The commodity world including oil is annihilated. Please don't tell me how good they were today. As I have said many times, always strong rallies after you've been taken out and shot. Again, that story is over. So yes, the market has held up amazingly well. Underneath though, there are major problems that say a break below 1200 Sp is still a very strong possibility. It also doesn't mean we don't see 1300 first. It's all a very long process that only bear markets can do so well.

We closed today basically dead smack in the middle of our current range if you can wrap your hear around that. 1200-1313 is the range and we closed at 1251. Say it isn't so. Be ready for more whipsaw because death by a thousand cuts is exactly what a bear market is when it's at its best. It gives you so much hope. It takes it away when you least expect it. All I ask is that you simply respect the markets message and not get overly bullish too soon. If we can break out well above 1313 and news is rocking positive and volume is strong and the advance decline line is awesome, go get bullish. I don't think you'll be seeing that any time soon.

We love to put lots of plays but this market won't allow it and since we know that whipsaw creates the most emotional responses, we're doing less until a direction becomes clearer. This will keep all of you out of trouble and allow you to focus on more important things in lives. When the market is this tough you're best off walking away from the computer and playing around with other hobbies. Stay tuned in to us if you believe we have a handle on things. We'll update non stop as always. Just know that anything between Sp 1200 and 1313 is pure noise and thus totally meaningless other than to short the top and go long the bottom until something mercifully breaks. Life is short. Don't just sit around playing this game for no good reason. Enjoy other things with your time. At sp 1251, you have no business doing anything aggressive with this market. Get more involved again as we get closer to 1200 or 1313.

Have a great weekend. Go enjoy life. Spend time with a child if you are lucky enough to be able to. Forget this nonsense called the market.

Peace

Jack