Tomorrow Could Be "One" of Those Days

Hang on for 8:30 AM tomorrow folks, it could be one of those very bad days. Normally after such a bad day in the markets I'd be cutting back some short exposure but I did not sell 1 iota today. The market technically is now breaking down, and I want every ounce of insurance I have.

What I see happening tomorrow morning is a violent reaction to this jobs number 1 way or another. Even if the number comes in "better than expected" I would not trust any rally off of it. It would be like throwing a handful of sand at an oncoming tidal wave expecting to stop it. 1 data point is not going to offset the reality of the situation. So if it's "good" the market may get a knee jerk rally; I won't trust it. If it's "bad", it might make the Kool Aid bulls look into the mirror and declare the 2nd half recovery won't begin like magic on July 1, 2008.

Again, what is happening in the credit market right now is plainly said, quite scary. And more scary are there are no solutions other than "time". Or massive government interventions. As we've been saying for weeks, the credit markets are a mess and equity markets ignored it. It won't matter until it matters. Now that certain stocks are imploding (Fannie Mae is in pure free fall as well), equity investors finally might care. We'll see what tomorrow brings but a bad number could really set us off - straight shot to that S&P 1270 level.

p.s. curious how the fund did today? Despite a 50% loss in Thornburg and 21% loss in MFA (combined they make up less than 2% of the fund at this point), the fund was down 0.05% for the day. Thank you Ultrashorts. And thank you Charlie Gasparino for not showing your mug today... ;)

Now we wait for Mount Olympus to give us the flawed labor report so we can all react like chicken's with our heads cut off tomorrow. As an aside, I'm reading a lot of "a bad jobs number will force a surprise rate cut tomorrow by Fed". Of course as we all know, this will solve everything as the first 225 basis points have helped, right? So if the credit markets dont unfreeze from the first 225 basis points, the next 75 basis points will help. And so on and so forth. See here is the problem with this end game - we only have 300 basis points left to play with. What happens when we run out of ammo? And will we be talking oil $130 and gold $1300 if we continue down this path of destroying our currency? Amazing times :)