Replies to post #79 on Steve's Place

[DeepBlue1]

Hey, it is what it is. It'd be worse if you were an innane cheerleader like Larry Kudlow who finds his ridiculous "mustard seeds" under every rock.

When I saw the futures this morning I went short right at the open and covered just as Obama come on the air since so far he's been able to spur some confidence in the market whenever he's spoken recently. But today's news conference was only about his Natl Sec team and the market didn't respond to it.

Then I sat out until the S&P broke below prior support levels and went all in SHORT again for the last 200 or so points to the downside and I'm still short overnight.

I've given up on trying to predict the final outcome(s) of this mess or the timing of it and I'm just day trading the trends until something changes

Nobody, and I mean NOBODY knows what's going to happen, and even the pros have been reduced to daytrading the volatility based on technicals. I made some good money again today.

One thing does seem clearer everyday though...the banks still arent' lending and I'm pretty sure it's because they KNOW it's worse than what it appears to be so far.

By the way, talk of the consumer credit card debt maturing is starting to bubble up and that will apparently dump another 2 trillion worth of debt onto the banks balance sheets. Maybe that's what they're worried about. ???

[DeepBlue1]

The smartest guy on CNBC, and the most honest too IMO(Rick Santelli) believes that the key to spotting the bottom/turn in this market is the USD.

I've mentioned the very same thing myself quite a few times in not so many words when I said that stocks and commodities are where you'll want to be when the dollar plunges/turns down.

In the chart below it seems to me that the acceleration to the upside is at least beginning to slow as the resistance points are getting closer together and the stochastics are not showing as strong of tops and smaller breakouts beyond resistance levels.

I also think that now that it's official that we've been in recession for a full year (DUH!), that people are already comparing the length and depth of this recession to all the previous ones and thinking we're halfway or better through this mess. Right or wrong, that's the new thinking spreading around.

There's also talk of a bubble in bonds and that the dropping yields are unsustainable now that they're trading at levels not since since the early 1950's.

Santelli mentioned that this is a very unique situation and if the Fed begins buying bonds/treasuries as they've said they could do (and may already be doing according to Santelli) that the yields could go lower still.

But the key here is the USD according to Santelli and I agree. It's the one thing that umbrellas all other things, from gold to stocks to treasuries, to inflation/deflation.

That's what I'll be watching as I search for the bottom.

By the way! Speaking of the devaluation of the USD and inflation...it's been devaluing for the last 6 yrs since just after 9/11 of 2001. And inflation has been rampant since then until just recently. 2001 was the time to buy gold/silver.

CHART BELOW.....

[DeepBlue1]

Very very weird action in the market the last two days...something's up.

It should by all rights have traded down hard today and yesterday. The fact that it's up both days is just crazy, whether by looking at the technicals, the futures, or the news.

It feels artificial and manipulated to me.

I have a gut feeling that the hedgies have decided to take a break from liquidating for the moment, knowing that they'd be selling into a huge wave of weakness. This would explain the light volume in this "rally".

It really has that feeling I get during a big blowout top move just before the big crash begins.

Friday is by all measures "supposed" to be a HUGELY NEGATIVE DAY on the news due out that day.

Rather than chasing this little move up, I think I'll wait for tomorrow afternoon to see if the Friday sell-off begins then, or it may not come till Friday when the news actually hits. Then I'll be looking to go short again.

But this "rally" is giving me the willys.

[DeepBlue1]

I've also discovered/charted a 2mth wedge forming in the DIA with a descending top(currently at just about 8600 and a bottom of 8000. It's getting very narrow and IT also helps explain why, inspite of the news/TA/futures that it rallied from just above 8000.

There's also a channel I've plotted in the same time frame with descending tops AND bottoms. The next top on that is around 9100-9200 and the next bottom is around 7600.

Don't know which one will prevail, but I'm pretty sure one of them will tell the tale.

Tomorrow there's INCREDIBLY BAD NEWS coming out of Europe and then on Friday we have the employment report which is also going to be very bad by most accounts.

I just don't believe that the market can withstand that much more bad news without breaking down below 8000.

I'm going to start buying my ultra short etfs as the DOW approaches 8600 today and/or tomorrow.

Have a good work day bud. Hope to talk at ya later.

[DeepBlue1]

Hedgies aren't done deleveraging yet, but they've gotten to a point where they don't have to panic sell and they're doing their level best to ration their selling just enough to keep the DOW at at least the 8600ish level.

If they manage to get a rally going above that I think it'll be violent, but I doubt they'll be able to keep from selling for long. They'll want to dump into strength.

This dynamic may actually hold the market relatively stable around this level for quite some time.