Even the Good News Failed!!!!

9:45 PM

As I mentioned yesterday "Perhaps if Germany votes for the bailout of Greece tomorrow, we might see a change in sentiment. But until that happens, we're going down and dirty."

And we had good news this morning. Germany voted FOR the bailout! Jobless claims dropped under 400k for the first time in more than a month. And GDP showed a small increase. Stocks took off at the open like gang busters!! But.........despite all the enthusiasm the bulls could not keep things moving their way. Soon things we going back into the toilet, and it was only some suspected short covering at the end of the day that gave the DOW a gain.

The talking heads are still proclaiming how the DOW moved up a whopping 143 points!!  It sounded like there was a bull market!   Then when you look at the chart you just have to laugh.  It still reads ...... NOSEDIVE!  Today did not break yesterdays high.  It did break yesterdays low.   And it couldn't get over the resistance line.  The long tail on the bottom of the candle wants to be bullish, but overall it's a neutral candle at best.

So once again we are at an impasse. Downside bias, but watch for positive news that could be a game changer and take the market up. Downside targets unchanged, and no changes in the trend table.

CURRENT MARKET TRENDS

Long Term (Weekly Chart) - Down

Medium Term (3 day chart) - Down

Short Term (Daily Chart) – Down

We Have Kissed the Channel Goodbye~

4:27 PM

A car can't run on fumes for long and the market can't run on rumors forever. Sooner or later you need to pony up and put in some gas, or see the rumors come to fruition. Today the rumors weren't there to keep things moving up. And there was no hard, positive market moving news either. So as the chart predicted, we "kissed the channel goodbye" and began the nosedive. Perhaps if Germany votes for he bailout of Greece tomorrow, we might see a change in sentiment. But until that happens, we're going down and dirty.

In this world liars abound, as do opinions from talking heads and politicians. But the chart NEVER lies. In it's purest form it talks of price and volume. The only two things that really matter. Price giving the obvious info and volume telling us if the buyers are coming in by the droves or running for the exits. Often charts remind me of the time honored question........"Which came first, the chicken or the egg"

Take the Bear Flag and the Dead Cat Bounce. At various points, like today, the chart told us where it was headed before any news (or lack thereof) moved the market. So often one wonders......did the chart predict the news or did the news make the chart? The answer is...... both. More often than not, the chart gives us the setup.   And then it just waits for the right catalyst.  Once the catalyst arrives on the scene, the market makes it's move, just as the chart predicted....... in most cases!  There are times when unexpected news changes everything on a moments notice.

Let's look at the recent Bear Flag. Chugging along we knew the odds were that price would eventually tank. And we even knew where price was likely to end once it tanked. So armed with this knowledge we played our trades and waited, being cautious, keeping our powder dry, knowing we would be ready for the downside move. So when it came, and it did, we capitalized!

Yesterday I pointed out the high probability that we would reverse and kiss the channel goodbye, heading for the downside. The chart gave us that info. It was a classic dead cat bounce. And sure enough, we tanked. Again ready, we were short and capitalized on the move. But still, the news (or lack thereof) could have changed things dramatically. The chart set-ups just give us better information and allow us to be better prepared. Set-ups are not always in abundance. You need to be the big game hunter, waiting in the bush until the prey comes along. Then and only then do you pull the trigger.  In the meantime patience is demanded!

Uncle Ben is speaking at 5 pm. Germany is voting on the Greek bailout tomorrow Officially called EFSF (European Financial Stability Facility), a bailout fund on steroids.  Both can be game changers. But as of now, the chart is telling us we are headed down to DOW 10,600.  See previous posts for support levels below that number.  No changes in the Trend Table below.  Now, text your Dad and let him know you're thinking about him.  

CURRENT MARKET TRENDS

Long Term (Weekly Chart) - Down

Medium Term (3 day chart) - Down

Short Term (Daily Chart) – Down

Marketing the Rumors

9:45 PM

Once again the media is bellowing with excitement. Did anyone see these market related headlines??

"Stocks Soar After Europe Debt Plan Hopes Spark Global Rally"

"Europe sparks third day of gains for Wall Street"

"Stocks rise for third day on optimism about Europe"

Hot Damn! This is exciting!! Everyone loves a party!~ And the RUMOR is that Europe is getting ready to host a party!! It must be true! TV said so!! The talking heads are abuzz. Media is in a frenzy! Entertainment value in the news abounds!! And yet when I look at the chart my media related enthusiasm starts to dwindle rather quickly.

"Step Right up" the carney man announces, "See the rally! Hear the rumors. Put down your dollars and watch them disappear!"

Seems all whispering about Europe is still working. Or so the media would have you believe. Yes, the media is even using Warren Buffet. The talking heads are all excited that he is buying back his own stock. The media actually wants you to believe that this is a sign that there are lots of good buys out there. Really? Good buys? Wow, so many good buys that with 40 BILLION dollars to spend, Warren can only find one company to buy.........HIS~! It reminds me of that classic line from the movie "White Men Can't Jump".........."This schit is TOO easy!" The big boys must be saying that as they scoop up the average investors hard earned money.

What the carney man should also be saying is "Step right up, watch the dead cat bounce! Watch him fall from heights above and BOUNCE!"

The charts are still hinting at down. We had our Dead Cat Bounce. And like the Bear Flag that preceded, we are about to head into a nosedive. Look at today's candle on the daily chart. While the talking head are all abuzz about another "up" day today, the candle is advising to beware if the possible reversal.

1. It has wicks on both ends, signaling indecision.

2. It's a red flag. Meaning that it opened high and closed lower! Down side bias.

3. The market tanked at the end of the day. The smart money was getting out. Perhaps the rumors are about to implode?

4. The Dead Cat Bounce has gone as far as it can.

5. We have kissed the channel.............

6. goodbye(?)

The only small fly in the ointment for the above is that we closed just a hair above the bottom line of the channel. Hmmmm. So if Europe does actually do something, we could move up again. Small probability, but there none the less.

One change in the trend table tonight. Now everything is Down~Down~Down

CURRENT MARKET TRENDS

Long Term (Weekly Chart) - Down

Medium Term (3 day chart) - Down

Short Term (Daily Chart) – Down

Hope Springs Eternal!

Hope Springs Eternal!

Monday September 26, 2011

9:40 PM

Seems all it takes is a few whispers in the right places and the party begins!!  Really?  REALLY?  The talking heads go crazy!  Everybody's excited!  Buy, buy, buy!!  Really?  REALLY??  Reports of POSSIBLE options being explored by the European leaders seems to be responsible for this new "rally" to the upside.  Really?  REALLY?  Isn't that what they have been doing for the last couple of weeks?  Exploring options?  Or was all that just fluff?  Yes <sigh>, it seems rumors, reports and innuendo go a long, long way these days.  I only wish the big boys would share those reports and rumors with me before they share it with the world!  Always nice to have a "leg up". 

 

Please, let's try to remember....... that reports, rumors and innuendo is just that.  Fluff.  Until something concrete is announced it's really meaningless.  And lastly, please remember........... if a dead cat is dropped from a high enough plateau, it bounces!!  And that's exactly what this.  A Dead Cat Bounce!

 

Let's review support and resistance levels.  Support levels are the areas in the chart that actually support the price action on the charts.  The same way your floor supports you.  It attempts to support the price of the falling stock.  It attempts to stop the fall in price. 

 

Resistance is a natural spot in the chart that tries to keep the stock from  moving higher. Think of it as your ceiling.  Then look at the Bear Flag before it broke to the downside.  The top line was the resistance line.  And each time the price hit that line it retreated.  And the bottom line of the channel was the support line.  And every time price hit that line, it reversed and moved up.  At least until........... the support gave way and broke.  Then price dropped thru the bottom and the Bear Flag Prophesy was complete. 

 

Now the previous support line has become the new resistance line (the new ceiling).  Price will have to work hard to break thru the resistance (ceiling) and move higher.  We need a bigger catalyst to accomplish that feat.  So we can hypothesize that it will take a few attempts to break thru.  And usually, in this type of pattern, it fails to do so and often reverses hard when price fails to break thru the resistance.  It is referred to as "kissing the channel good-bye".  In other words, price often moves up to the bottom of the previous channel (the new resistance line) and then drops, this time going farther and deeper than before, creating yet a new low.  In our case to test Dow 10,420.  Or perhaps to test the magical Dow 10,000 level.  The fix is in.  The odds are a move to the downside after kissing the channel good-bye.  The fly in the ointment?  That would be the European Leaders actually doing something.  Something worthy of a decent rally.  And I don't see that happening quickly enough to avoid another drop and another test.

 

Yes, today was a good day.  But the little rally is based on thin air and nothing concrete.  And it was great that we closed above Dow 11,000!!  But it's not enough.  Without concrete action, we will kiss the channel good-bye and take another nosedive.

 

One change in the trend table tonight. Short term is up. Target?  The resistance line.  Call it about Dow 11,200.  Watch for the reversal.

CURRENT MARKET TRENDS
Long Term (Weekly Chart) - Down
Medium Term (3 day chart) - Down
Short Term (Daily Chart) – Up

A Dead Cat Bounce

5:56 PM

Seems the market had a bit of an up day.  Yes, even a dead cat will bounce when dropped from a high altitude.  But we're still going to go lower.  Considering the state of politics today I don't see the possibility for much more.  But wait, Uncle Ben gave us "Operation Twist"!!  Oh, perhaps it should have been named "Operation Twist.......in the Wind"!  Hello, Uncle Ben.  Clue.  It doesn't matter how low mortgage rates are if you don't have a job!  Hellooooooooo!

G7, G20, Congress.  They can't seem to get it together.  Frankly, I don't think really give a damn about anyone but themselves.  Greece, Italy, Spain, Portugal, Ireland.  Set up just like dominoes ready to fall and looking for a push.  The Euro: Germany, France and the rest unable to agree on a path out of the woods.  They should consider renaming themselves from the European Union to the European Free For All.  

And Congress.  What a bunch of assholes we have there.  These idiots just don't get it.  Our country is in a crisis and all they can do is fight and jockey for position.  They have no shame.  With all that has happened in the past few years they have only gotten worse.  In the latest debacle, it seems jockeying for political position is more important that getting aid to storm victims here in the good old U-S of A.  OMG!  Really?  REALLY??  They haven't learned a thing from the last several disasters they helped to create?  We just got thru the debt ceiling crisis where they amost threw the economy completely into the toilet, and now they can't agree on a bill to keep the government running and get aid to hurricane victims.  Nice huh?  And we wonder why things are so bad in this country.  It doesn't matter about their party affiliation.  They all reek from the smell of shameless self promotion.  I say it's high time we sent a message.  I say it's time to fire them all.  We need to send politicians the message that we won't tolerate this behavior anymore.  They are there to do a job, not for personal gain.  Time to start campaign CLEAN SWEEP!

The charts.

Dead cat bounce?  Probably.  Consolidation?  Perhaps.  The volume today was below the 50 day average.  Not a good sign that buyers are eager to play.  A rally from here?  No way Jose~  The weekend is here and we have two days for the politicians to screw things up some more.  Add that to the charts and we still have room for more downside.  Gold, Silver, Copper, Oil all taking a beating as everone runs for the dollar out of fear.  And we need more fear, more blood in the streets, panic and more downside to create a high volume capitulation where there are no more sellers to be found.  Then, and only then can we begin to build an upside.

No change in the trends.  No change in predicted downside targets.  Hey, look at that.......a man is twisting in the wind~  Will wonders never cease.

CURRENT MARKET TRENDS
Long Term (Weekly Chart) - Down
Medium Term (3 day chart) - Down
Short Term (Daily Chart) – Down

Diagnosis: Manic Depression

6:06 PM

The patients behavior is markedly filled with mania and delusions of grandeur. The slightest whisper or rumor of something good causes a rapid response eliciting exuberance, excitement and mania, followed by a slow drift back to reality. When the reality of the patient's true dire circumstances are again recognized, the patient often drops into a deep bout of depression, like the one exhibited today.

Remember that the market is just people. And people are emotional animals. The collection of people that comprise the market are now behaving like people trapped in a snow-slide. The slightest hint that they may be rescued, even if it's just the whisper of the wind creates exuberance, excitement, and mania!! And when they realize it was just the wind, they return to depression, often falling hard and deep as happened today.

The Bear Flag has come full course, and true to form the market dropped precipitously today, breaking down thru the bottom of the channel as I have been warning over and over. All we needed was a catalyst, and we got that yesterday. So everyone should have been looking for short plays today if they read my blog.

While we did have a little rally at the end of the day, look for more downside tomorrow and perhaps again Monday (We'll have to wait to get a real read on Monday). We might get some consolidation here, but I am leaning towards a move lower, with a high probability of a test of the Dow 10,000.

Another somewhat remote possibility is finding support at the 10,450 level. There are two charts below.  The daily showing the Bear Flag consummation, and a 3 day chart where you can see the pattern in May of last year that is very similar to today's pattern. This similarity also bodes for a bottom at 10,450.

And finally, keep in mind that while the global situation is difficult, it does not signal the end of life.  Things are not good, but they are not as bad as the talking heads proclaim.  In today's age, the news is no longer Walter Cronkite giving you the unbiased facts.  Today the news is filled with drama, bias, entertainment, and the desire for ratings.  Last quarters earnings reports were pretty good, all things considered.  Let's hope for another positive round of earning when the new quarter arrives shortly.  Perhaps we can replicate that bear flag of last year and move forward to a new rally.

CURRENT MARKET TRENDS

Long Term (Weekly Chart) - Down

Medium Term (3 day chart) - Down

Short Term (Daily Chart) – Down, Down, DOWN.

The Downside is Up~

9:02 PM 

A pivotal day today.  Yesterday should have been a "clue" to everyone.  A downside candle yesterday, the FOMC decision today, and Operation Twist a foregone conclusion already priced into the market.  It screamed "watch out belowwwwwwwww" 

 

Everyone was hoping for MORE HAPPY JUICE from Uncle Ben today!  The market wanted more than the meager sheckles from Operation Twist.  Go figger.  But 'tis true.  Some felt sure it wasn't coming.  But everyone wanted MORE HAPPY JUICE!  Psssst.  Uncle Ben........how 'bout a little.......you know?  Come on........Pull-eze!  And what do we get?  The brush off.  The walk away swagger.  How could our Happy Juice Dealer nip us in the bud like that??  And after all we did for him!!  Like a crack dealer refusing to give his addict another rock, Uncle Ben just gave us "Operation Twist".  It's like giving a crack whore a little caffeine and telling her to be happy with her high!  Damn, that's harsh!!

 

So what's the chart telling us today?  What's the agenda for tomorrow?  Do I really need to spell it out for you?  Ok, Ok, Ok.   D-O-W-N-S-I-D-E!!  The market tanked big at end of day, so it's likely the momentum will carry thru tomorrow.  Volume was larger than average.  And the close was just a hair under the bottom of the Bear Flag Channel.  And ya just can't withhold the Happy Juice from a crack whore without having her throw a fit.  I can easily see Dow 10,850 at the closing bell tomorrow.  Yes, it's the bottom of the ninth in this Bear Flag and the Downside is up.

 

CURRENT MARKET TRENDS
Long Term (Weekly Chart)  -  Sideways with a down bias
Medium Term (3 day chart) - Sideways with a down bias
Short Term (Daily Chart) - Down Down, Down.

Wild Swings Today

But nothing changed in todays chart's formation.  Bear Flag still in effect.  Market tanked in the AM on "feelings" that the weekend did not produce a solution for Greece.  Then tossed off some of the loss on the word that talks are still in the air.  It's all inuendo and BS.  Volume down today, but it was a Monday after all.  And note this, there is a divergence of the QQQ.  Seems the NASDAQ is making a move to the upside and has broken the 50 SMA on the daily, 3 day and weekly charts.  And the Nasdaq is usually the first  to rally.  Sooooooo, we shall see.  Right now it's Bears 2 (SPY and DIA) Bulls 1 (QQQ)

No change in the Trends, no reason to post anothet chart.

"Still Drinkin' Happy Juice" or "Beware the Bear"

Despite the lack of really good news the market keeps moving up on hopes and dreams.  We need some concrete good news to sustain a nice market rally.  And so far there is none.   And this plays right into the Bear Flag possibility.  I won't bore you with a complete review of the news.  I'm sure you have kept up with all the shenanigans lately.  Right?  Awww, come on, you know.....

The Geither gambit.  Really?  Really!?  What was he thinking??

UBS whining about a rogue trader, as if that hasn't happened to them a half dozen times before.  Hey, you guys at the helm, wake up, pay attention!! Stop screwing around.  Ohhhhhh, it was okay when he made you money, but it's not okay now that he has lost money.  Hmmmmmm.  I think I heard a UBS exec say in a whiney voice "But I want to eat my cake and have it too!"

The talk about a Eurobank TALF

Michigan Consumer Sentiment (it sucked but hey, better than expected, so isn't that ok?  Yea.....SURE!)

The ratings cuts to France's primary financial institutions, Societe Generale and Credit Agricole.

Italy and talk of China helping them out.  (Soon China will own everybody!  Mark my words they are winning the financial war.)

Jobless claims totaled 428,000, which exceeded the 410,000 expected.

Empire State Manufacturing Survey - down again.

See, all that good news and inuendo!!  No wonder the market went up this week.  (He said sarcastically while scratching his head).  And there are some people that think bad news is good news.  Why.  Well it will  bring Uncle Ben to the podium to annouce a QE3.  Hmmmmmm.  Really?  REALLY!?

Lucky for us, we are technical traders first and foremost.  So despite all the rhetoric we were prepared for the upside and we got it.  Have another cigar and some more Happy Juice!

The CHARTS:  The DIA is still in a Bear Flag formation, as is the SPY and the QQQ.  Yes, the SPY and the QQQ do look like they could break out of formation and move up, but that is unlikely at this junture.  As indicated on the chart look for more upside next week  And always be ready for that nasty Bear to show his ugly head.  First resistance is at the 50 day SMA.  If it manages to break over the 50 SMA, next stop the top of the Bear Flag channel at about 119.  My money is on a reversal at the 50 SMA.  Just waitin' for the right catalyst to cause the move.

Here's the CHART and the Trends

CURRENT MARKET TRENDS
Long Term (Weekly Chart)  -  Sideways building a base and trying to break to the upside!
Medium Term (3 day chart) - Sideways, but unable to break over the 20 MA
Short Term (Daily Chart) - Up, but remember the Bear Flag!!

It's a Party in Europe........AGAIN!

8:47 PM
Bad news be damned, there's a party going on in Europe!  Yup, seems the good ole USA and the Brits have conspired with the European Central Bank to "extend loans to European Banks to improve liquidity".  Oh, SURE!!  In other words....... a European TARP!  More "happy juice" to put into the market and give us all a new sugar high.  I can hear the machines now, printing more money......ooops, I mean making more "happy juice" for all the grown up kids to get high on.  Yea, that'll work....... for a while.

What is it with these people.  These financial leaders, experts, etc.  Are they insane?  No one...... not the US............ and certainly no one else in the world wants to face reality.  We cannot keep spending more than we make.  It's pretty simple really.  Most families have to do it every week, every month, every year.  Can you hear that Greece?  Ireland?  Italy?  Portugal?  Spain?  Can you hear at all?

But I digress.  The news got everyone in "PARTY MODE"!  So the Dow went up 186 points.  Yaaa-hoo to coin a phrase.  And we have made it to the middle of the Bear Flag Channel.  Yup, there's still a Bear Flag in full formation.  Note yesterdays remarks......"headed toward the top of the channel" AND "Expect another weak up day tomorrow".  Ok, so it wasn't really a weak up day!  LOL

What is the chart telling us today?  More of the same.  It is still saying "Price is headed north ~ most likely to the 50 SMA at 11,700 before we turn tail and head south.  But keep in mind that tomorrow is Friday, and many will not want to hold positions over the weekend.  No, that's way too long with too many opportunities for market crazy news to develop.  So unless we get more "happy juice" news from somewhere I'm not expecting much from tomorrows action.

CURRENT MARKET TRENDS
Long Term (Weekly Chart)  -  Sideways building a base and trying to break to the upside!
Medium Term (3 day chart) - Sideways with down bias, Bear Flag intact.
Short Term (Daily Chart) - Up, but that darned Bear Flag is intact here also.

Yesterday's Day Today~? Close, but no Cigar!

4:34 pm
Today we almost got the day we wanted yesterday.  Yup, after a very weak follow thru yesterday, the DOW moved up today.  Dow +140 points.  Nice huh?  So one would think without further investigation.  But at 3:30 pm the Dow was up 281 points!  In the last half hour, the market gave up half the day's gain.

Talk of Eurobonds to float Europe out of the financial floodwaters seemed to have everyone in a good mood this morning.  But talk is cheap, and bailout's just don't seem to last for long.  And when China voiced it's disappointment over everyone's financial issues, no one seemed to care for most of the day.  Then at 3:30 pm the big boys began to unload positions, take their profits.  And this wasn't the usual "last few minutes" of profit taking, it was much more than that.  Volume soared~  So before you raise your glass and yell "cheers" over a good day, look again and ask yourself............ why the end of day dump?

Perhaps it was the realization that the "good" news really wasn't more than cheap talk, and was nothing substantial.  Perhaps the smart money knows something we don't.  Perhaps, perhaps, perhaps.  All we know is what the chart tells us.

This market has become so volitle and news driven lately that even a whisper seems to move the market.  As such it is virtually impossible to tell where we are headed day to day.  So why take the risk of an overnight hold?  Dump it now and take what you get.  And more importantly the Bear Flag has not withered and withdrawn from the charts.  No, no, no!!  The Bear Flag formation is still alive and kicking, watching and waiting.  The tails on both ends of today's candle tell the story.  It's not bad, but it ain't great either.

So here's the read looking at the chart.  Bear Flag still valid.  Price is moving up in a choppy fashion and looks to be headed toward the top of the channel........ or so we hope.  Expect another weak up day tomorrow, but with the flag still there, be watchful for a downside break.

And remember,
Jack be nimble...........


CURRENT MARKET TRENDS
Long Term  -  Sideways with a down bias, trying to build a base.
Medium Term - Sideways with down bias
Short Term - Up (But watch for potential reversals)

Ho Hum~

5:37 PM
It was in many respects a Ho Hum~ day.  Dow up 44.  Yawn.  S & P up 10.  Yawn.  No market shattering news to be found.  The best thing that can be said for today's action is that it was an "up" day.  There were of course some stocks with nice gains.  I hope you had a few of mine on your list this morning.  PANL +5.98, BBBY +1.20, CERN +2.05, MAKO +3.32, PSMT +1.93 , ALXN +1.06.  Nice charts all, and nice gains today.  But the candlestick that grew on today's chart shows a market that is indecisive, unsure and unwilling to pick a direction.   Today's candlestick looks a bit like a "plus" sign.  No real gain here.  And volume was "just another day".  All are indicators that the even the market is confused!  But note that volume has begun to level off.  Perhaps a tell of sorts, but nothing to hang our hats on just yet.

Remember........Always remember.......... that Price and Volume are the kings of indicators.  At the end of the day not much else matters.  And with hundreds of other indicators out there, none tell more than price and volume.  The Holy Grail of indicators just does not exist.  And this is what makes the chart so honest.  At the end of the day, all that really matters is price.

But I digress.  Where is the market headed?  The chart says we are just waiting for the right catalyst, then down we go!  Down to Dow 10,600 and most likely to 10,000 after to test that magical psychological number.  When will the drop come?  Dunno.  What will the event will be the catalyst?  Beats me!  But the bear flag is intact and looking weaker and weaker as the days pass.

So I leave you with this well remembered nursery rhyme.

Jack be nimble,
Jack be quick,
Jack jump over
The candlestick.

And when you trade tomorrow...........Be nimble, be quick, and be ready to jump in or out of the trade as the market dictates.

CURRENT MARKET TRENDS
Long Term  -  Down and sideways, trying to build a base.
Medium Term - Sideways with down bias
Short Term - Up (But watch for potential reversals)

By a thread..........

8 AM
The market dropped and popped at the end of the day Monday (seems there was a bit of short covering!)  The rumor fueling the End of Day excitement was that Italy had found a source of financing in China!  As a reason for the end of day rally that seems a bit lame, but none the less, that was the word on the street.  The good news is that we ended the day over 11,000 and the candlestick indicates we should have a strong move up Tuesday.  The emphasis on "should"!  Perhaps that thread is actually a steel cable?

Today we need a strong upside follow thru to confirm the up move to the top of the channel.  The bear flag is still in effect, the downside bias is still hanging overhead, and the outrageous volitility of the last 6 weeks continues.

Note the temporary change in the graph below.  My usual program is being a bit tempermental!

Current Market Trends
Long Term  - Sideways with down bias
Medium Term - Sideways with down bias
Short Term - Up (But watch for potential reversals)

The Other Shoe Dropping?

08:41 AM
Seems the weekend wasn't all we hoped for.  Greece seems to be struggling and everyone is practically expecting a defaut.  Moody's is believed to be considering a downgrade for France, and the G7 meeting produced nothing but talk.  (Gee, no surprise there!)  Throw in a little nuclear plant explosion in France and you have the makings of another down day.  Overseas markets are in the toilet and we are headed that way in sympathy.  So..........hope you have been paying attention the last few days of commentary!  Today's watchword is SHORT!  Yes, that's S-H-O-R-T!

The Good, The Bad, and the UGLY~

Can you hear the background music from the famous Eastwood spaghetti Western?  It's there, somewhere, floating in your head.  Ok, ok, try this~  http://www.youtube.com/watch?v=AFa1-kciCb4

The GOOD~ The week is over and you had a good day (Please, Please tell me you went short for the day!)  And even while we have ended the week at the bottom of the channel, we could bounce up.  If that happens remember it could just be a dead cat bounce!

The BAD~ The bear flag is close to breaking to the downside. The DOW could not hold 11,000.  We have the entire weekend for bad news to develop.  It's September, typically a not so hot month for the market.  Greece is on the toilet and the Europe has a really bad hangover (see Wednesday's note about the party).

The UGLY~  Take the bad, add Monday Morning Blues, stir in a little bad news over the weekend, and add a pinch of fear and we could see the downside drop.  Friday' candle for the DIA poked it's tail thru the bottom trendline and wilh just a little push could easily violate the bottom of the channel.

And a breach of the channel could get ugly with the current state of affairs.  First a test of the Dow's August lows (10,600), then a quick stop at 10,500 on it's way to the magic psyche level of 10K.  Break that and you'll need some K-Y if you're long.  So the message here is a resounding cry to keep your powder dry!  Watch your trades closely and be ready to jump out at a moments notice.

Enjoy the Weekend~!

Current Trends
Long Term - Sideways with a down bias
Medium Term - Sideways with a down bias
Short Term - Dowm

Bernake takes a dump but Obama has a dream!!

Tweedle-dee and Tweedle-dum.

Bernake speaks and …… Yawn…… Ho hum.

Talking heads wait with baited breath,

Will Obama's words will pass their test.

 

Some think it will,

But it won't matter,

Congress won't pass it,

And there is no Mad Hatter!!

Then Obama speaks, he starts to beam,

I do believe he has a dream!

But can he, will he, make it real;

Can he get Congress to pass his "New Deal"?

 

Will it? Could it?  Do ya think? Maybe? It could work? Where's Alice?  Is she still in Wonderland? Lions and Tigers and Bears, OH MY!  Yes, Oh my!  We can hope for a fix, but it's Washington DC folks and politics as usual.   It's all semantics at this point.

 

Some say the cup of coffee is half empty.

Some say the cup is half full.

Either way.........................there still won't be enough freaking coffee!!!!!  

And Congress will keep fighting, it seems to be all they know.   

 

Check out this link to an article by Charley Reese.  It was written in 1985 and nothing has changed since.  It's past time for a clean sweep in the land of DC, but I'm not sure the average Joe really cares any more.

http://www.lewrockwell.com/reese/reese494.html

 

Today the market took a slight dump after Bernake said nothing about more candy for the economy.  Seems  we've had enough sugar from Uncle Ben even though everyone is jones-ing for a new high.  He's just not gonna budge!

Speaking of dumps, tomorrows action is a crap shoot.  Could be good, could be bad, we'll just have to wait and see.  Keep in mind this is a NEWS DRIVEN market. So any negative news can slam price back down to the trendline and possibly below it.  Or it could march upwards to the top trendline.  How will the big boys react to Obama's speech tonight?  It's anyones guess and the action tomorrow will give us the answer.  So load your powder with a few longs and a few shorts and  get ready to play.  Remember, a close below the bottom trendline could easily set things up for big drop. If that happens, first stop..... Dow 10,500.  And I'm betting no one wants to hold 'em over the weekend.  That always reminds me of Kenny Rogers.  You got to know when to hold'em...........know when to fold 'em..........

Don't forget, Sunday is the 10th anniversary of 9-11. Take a moment to remember that tragic event, the lives we lost, the heros that worked so hard to save so many.  Some things should never be forgotten.  

Here's the daily chart of the DIA, not much has changed~

 

It's a Party in Europe!!

What a day~!  Yesterday we tanked only to rise from the dead and post a decent day.  Today a lot of people with a lot of money said the Bulls were in town!  And the last 6 weeks have seen the market move on a whim and a whisper, as the news breaks.  Wild swings!  The talking heads are as useless as ever at figuring it out.  It's all a job to them.....entertainment.  What?  Excuse me?  Oh, yes, of course...... the charts.  The have been screaming at us showing price and volume, the only real indicators!  And volitility shows itself in large moves in both directions.  And what are they saying today?  They are carving out Bear Flags!  The Dow, the S & P 500, and many of the lesser indices.  But since the Dow is the Admiral of this Market Ocean, lets look there for answers.  Note the trendlines creating an upward channel.  As if the wind is blowing a flag toward the 2 o'clock position.  And notice the falling volume!  Seems to be the formation of a classic Bear Flag.  Price vacillating as it moves upward, buyers coming in on the bottom trendline and some leaving at the top trendline.  And volume telling us that as we move forward and price moves higher fewer and fewer buyers are willing to risk that price will go higher.  And when no more buyers emerge........... TANK goes the weasel~!The unknown answer is ........when.  Perhaps we'll get a hint as we move forward.

A Bear Flag is a "flag" blowing upwards, giving the uninitiated the impression that all is well and the market is moving up nicely.  But a Bear Flag is called that to imply the end result.  With a high degree of probability, the bottom trendline eventually gets broken....... and the ensuing words are......."Watch out BELOW" as the bear commences his march to the downside.  The bewildered novice bull is left wondering what happened as he watches his money fade away.