Well things looked good at 3:00

So, the big rally off of a major support line yesterday lasted all of one day. Today we started out weak, sank down, hit a bottom, rallied nicely until 3 gongs on the clock. The final hour wasn't good. The markets ended down about 4%.

So, is this it? Is the bottom about to fall out? The next stop is Dow 7200, S&P 770 when the time comes. Or do we have one more rally in us? My feeling is there's one last rally and it could be impressive. But it's only purpose will be to suck people back in thinking the worst is over... and then the rug will be pulled out.

In case you weren't aware, the market does have a personality, it does have a soul (an evil one) and it can be manipulated to accomplish certain things. Yesterday being a prime example. Technical analysis widely known and used showed 840 on the S&P as a very major support line. So, what do a lot of money managers do? They set stop loss orders near that line so that if it crosses it's assumed to be a bad sign and it sells their holdings. The markets knew this and purposely went below 840 to 819 to wipe out all of those stops and force selling and then immediately rallied huge. During the ensuing rally a lot of buying took place roaring up all afternoon sucking people in with cash on the sidelines.

Usually the rally will last a few days. But we're in unusual times and the evil ones decided to toy with us today. Down at the open, down until noon, then the rally and then failure.

Who knows what to expect for Monday. My best guess is that unless GM announces bankruptcy this weekend we'll have an up day. I won't be holding my breath, but I'll be hopeful.

As I've mentioned, I do a lot of reading and have found some people very knowledgable on the web and there is one guy who is amazingly accurate with short term predictions. He also provides long term prognostications and his anticipated bottom is 400 on the S&P, another 50% decline from where we are today. That's in line with other estimates I've seen. The eye opening part of this prediction is he says it will happen 12 weeks after we dip below 720. Other predictions I've seen have said we wouldn't bottom until the first quarter of the year 2010. I actually prefer this 12 week prediction in that means it'll happen sooner and we can be done with it. Rip the band-aid off.

Honest, I'm not a doom and gloom guy, but I absolutely believe that the true devastation of what we're about to go thru hasn't been recognized by the majority of people. This is bad folks. Real bad. 75% or more decline from the peaks is actually possible.


The government hasn't been throwing around 3 trillion dollars so far just for kicks. They know what's hiding under the surface and they've tried everything they could to try to slow down or stop what could be a major economic disaster.

Enjoy the weekend and let's hope the G20 can come up with a magic pill for the world.