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Thursday, October 9, 2008

No Shelter

The chart of the day, an arrow pointing straight down.

Looking for relative strength? There wasn't any.

I mentioned yesterday that I thought the 966-972 zone was very important support (the black line above and the red line in the middle). It was punctured early on, but I thought if we stayed above 960 we would be ok. Just after 2 pm, the big boys started selling, and 960 fell, leading to a collapse. On a long term chart, I see a support level around 850, and after that is the 2002 low, about 773.

The Nasdaq went right through a support level at 1650. We may get support at 1576, then 1434, and 1123 is the 2002 low.

The Dow Industrials is sitting jjust above a support level around 8500. Below that is 7790.

The Russell 2000 is possibly the least damaged of the charts, but still looks horrible. We went right through an important support level today at 516, and I dpon't see any until 409, then the 2002 low around 334. That is a very long drop.

Well, if stocks suck, how about treasuries? Not the 10 year, it sold off today too. Of all the charts I looked at today, this one scares me the most. Our country needs to borrow $2 billion a day to stay afloat, and with the 10year selling off, we could be in deep trouble.

We have finally solved the peak oil problem: Kill demand. Popping the commodities "bubble" was supposed to rally the market, but instead we shot the last man standing. Not only will this kill earnings in the SP500 this quarter (energy was by far the only sector to have decent earnings last quarter), it will also kill any efforts to find alternative energy sources, as they will no longer be profitable.

The VIX is back up to 62, the put/call ratio is at 1.34, and panic is in the air. I don't know how close to capitulation we are, biut it had better come soon. There is a bottom to this market, and that is zero.

I usually don't agree with Ben Stein but always like reading him. Today's column is brilliant and summarizes what destroyed this market. Too bad he laughed off the people who were warning of this months ago.

There be no shelter here.

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