How Quickly Things Change - Where is Charlie Gasparino?

Amazing how things change that quickly, eh? Bear markets.

Wednesday at this time, I wrote an entry in which I put out this chart of the S&P500 and said a picture is worth a thousand words. We were at S&P 1382 level and right below the 50 day moving average. Champagne corks were being uncorked around NYC. The bottom is in folks were crowing. (for the 50th time). "Everything will be fine in 6 months" everywhere you went. Traders were dancing to "Conga"



I wrote:
Once again, people have no clue about the tidal wave of inflation coming in my opinion and just how awful this is going to be to a consumer lead economy. Profits are going to be punished for any company tied to the US consumer, no matter what the stock prices are doing today. It's simply denial. We are in full Kool Aid stage, which happens for a period every 3-5 weeks where bad news is great news. We are simply conditioned to believe the Fed does fix everything and I think sometime in the next 9-12 months people will finally come to the realization it cannot. But they won't believe it until they see it.

Now, exactly 48 hours later to the minute we are down at S&P 1334. And the chart looks like this.



So in 2 days, we're right back at the bottom of this never ending range. At this time 1 week ago is when our buddy Charlie Gasparino broke news of the pending Ambak (ABK) bailout and when all the above mentioned partying began. So again,this is like Groundhog day since August 2007. Bad news comes out... market goes down. Some sort of Fed induced bailout, Bush induced bailout, Paulson induced bailout, Fed cuts, or Buffet buyout news comes out, market goes up. Repeat. Rinse. Over and over and over. Months on end of this. *yawn* When facts come out, market goes down. When interventions come out to stop the inevitable, markets go up. One can only imagine where the market would be without all these bailouts, Fed cuts, speaking tours, etc.

Eventually these people will be right, and the bottom will be reached. But they've been calling it for half a year now. Credibility is shot. And people who listen to them are down a ton. Then when they actually are correct, they will crow about it - not mentioning the 49 previous turns they called too early. Again... bear market. Broken technicals. It is not to be believed until we make a clear uptrend up.

Right now, as the market faces falling off a cliff (again) is when they usually trot out good ole Charlie on CNBC to save the market. I don't have a TV so I'll wait for the market to skyrocket 200 points for no good reason like it did twice (Friday and Monday)... *yawn*. Either way I am dumping (as written this morning) Ultrashorts left and right into this firestorm.

We still remain in this gosh forsaken trading range: S&P 1320 on the bottom and the 50 day moving average (1390) on the top - at least we broke S&P 1370 which was the top for past few weeks. So we have a slightly wider range.

What next? Well for the last 6 weeks pattern, we will bounce soon (just like I wrote last week around almost the exact same level). Groundhog day. The problem is we continue this pattern over and over, and eventually it will break. And the longer a pattern is the more strength the break will have - meaning we are going to have a tremendous move once we exit this range. If it is up or down is an open question but since all this mumbo jumbo trading is below all key technical averages, you have to believe down. But for now, since I fear the ability of Buffet to heal the sick children with a touch of his hand, I am cutting back on my Ultrashorts and simply moving 90% of it to cash. But .... if we break below those key technical levels of late (S&P 1320) it gives credence to the thought that we will be breaking down (not up) and that retest of January lows I've been waiting on is in order. And I'll be buying back all this short exposure (and more) that I am letting go this afternoon.

So it is hard to press shorts here with Buffet-palooza coming to CNBC Monday morning, plus such a swift degradation in 2 trading sessions. But hard to be too bullish based on reality of the economy, and technical condition. So we continue into limbo....

p.s. from the Department of Pathetic Facts: The drug addicts on Wall Street pushed up probability of 75 basis point cut at March Fed meeting from 30% range yesterday to 60% today. These people really are sad. The first 6 cuts really did the trick, eh? I believe the last 50 basis points satisfied the market for an entire 45 minutes before the drug addicts turned against their dealer and pushed the market down. The "fix" is lasting shorter and shorter amounts of time. Do they really think this is a salve for everything. It is so old. But we can begin rallying any day now for that mid March meeting (more Fed cuts coming! Yee haw!), because as we all know (all together now) "Fed cuts solve everything".

They need their drugs (rate cuts) and they need it now. 75 basis points. At some point Ben will look into his gun and realize he is out of bullets. And we're going to be Japan. I'm wondering what the drug addicts will ask for then?