Disastrous GDP report at -6.2%. Also the news that Citi will be forced to raise private capital in matching funds is weighing on the financials.
One of the points with the Citi deal is that all the preferred stock must be converted into common. All I can say is what’s the point? So much wasted effort and resources, we would be SO much better off letting the system go and starting over. That’s going to happen, mark my words. All the people who are trying to save the current system are simply going to lose. Hey, people didn’t believe me when I said WaMu wouldn’t exist nearly two years before it happened… it happened.
How do I know? I know because the math doesn’t work. The math doesn’t work for our nation as a whole, either. Thus major change is coming.
So, we’re going to open below the November lows on the S&P… too much bullishness as indicated by the put/call ratio. All those people were once again on the wrong side of the trade. Meanwhile, the Doc and I have just been drawing channels and counting.
If you look at the chart Doc posted last night, you’ll see that the bottom of the channel is all the way down about the 715 area today. Will we get there? Don’t know about today, but yes. The bulls HOPE that the market doesn’t close below the November low. Doesn’t matter. We already have a new closing low and now we have a lower pin low.
Be cautious, though, as sometimes the markets will rally after a breach of an important support level. We’re also expecting a larger wave 4 at some point soon, so getting a little protective is probably a good thing. If you’re betting on an all out collapse, you are taking a very big risk. Doesn’t mean it can’t happen, it can. What I do is take profits here, but I’ll keep something short just in case and if I see further technical breakdown, then I’ll jump in and use my entry point as a stop.
Honestly, there is not a lot of support down here, but a retest of the break is almost guaranteed.
The oscillators are oversold, too. So, the market’s definitely under pressure… the Doc and I are taking profits, but holding some short.
Have a good day, and best to your trades…
Billy Joel – Pressure: