Do You Trust this Reversal?

This is about the 5th significant reversal on the way down during this month and a half correction. In the old days these reversals used to be bought because you could trust them. Dramatic drops, followed by indiscriminate selling, followed by a bounce - that's a screaming buy in the old (non socialized) market. Now, you just wonder whose hand is doing the buying. Each reversal previous to this has failed and slaughtered bulls playing by the old handbook in the process.

Perhaps when the market gives up buying the reversals - that will mark the real reversal. That would be fitting.

The worse this never ending selloff gets, the more dramatic the dead cat bounce is going to be. We are "so oversold" but those have been the most dangerous words to anyone with capital on the long side for weeks on end.

For now it simply looks like one of these endless rotations and not a true reversal - out of the things working and into things that have been decimated. We saw this exact same scenario a week ago to the day - Tuesday [Worst of Breed Rally]. Everyone who bought that rally, and especially the stocks that rallied (retail, homebuilders, financials) was immediately beheaded within 24 hours. And within 48 hours everyone fled into the commodities. Which today are being pounded. Only a market suited for daytraders right now folks.

And this is why they say in bear markets both bulls and bears have trouble making money. Especially acute in this day and age where things completely reverse 180 degrees every few hours at times. I called last week the week of reversals like no other as we saw this type of action 4 of the 5 days. Today is just a continuation. Nothing we can read into this at this point; frankly I simply have my doubts. But I continue to abhor this run into technology as a "safe haven" each time commodities get rocked :) Remember we have Intel (INTC) tonight - maybe that will help the mood - after all it's a safe haven and all.

As we wrote earlier, we want to be north of S&P 1275 to feel as if the all clear (for a short while at least) has been sounded. I'm not sure how much longer we can go down on the "same news" - yes all these banks stink - we know it. They won't all be out of business - just take everything below $10 and close it down and open 1 new FDIC sponsored bank tomorrow with all the assets. Problem solved!