Blowoff is a Comin'

The Fed, along with Central Banks around the globe cut target interest rates in a massive coordinated effort to boost confidence. Now, those of you following me know that there is the theoretical rate and then there is reality, what interest rate the Banks will really lend commercial paper (short term loans) as set by the LIBOR. The Fed cut interest rates by 50bp and the LIBOR actually WENT UP! Is there anything else I need to say to confirm what I have been stating here all along......talk about firing blanks! The Ted spread, which is the difference between what Banks pay for three-month loans (3m LIBOR) and the three-month T-bill is up 44bp to 4.00% as reported on Briefing. The LIBOR, the Swap Spread Rate, and the Ted Spread are all ways of looking at the same thing, the real cost of short term loans is extremely high, and Banks are pretty much ignoring the Fed's (and other Worldwide Central Banks) target rates.

Earnings Season is starting with a whimper as AA missed.....Also, same store sales are coming in worse than expected (except for WMT, which is where bargain hunters always go in a bearish environment).

Yesterday I warned that we are getting close to a blow-off day, and that we are at risk for that day to begin with a sell-off into the 950 area on the SPX. Well, we hit 974 on the SPX on the gap down at the open just now, and the market is trying to bounce. I don't know what the precise number will be, but I do know that analysts are typically wrong, right at the bottom.....Which brings me to little, loud Jimmy Cramer, who told the world this morning to GET OUT OF THE STOCK MARKET AND STAY OUT FOR THE NEXT FIVE YEARS! Now, where was his advice to get out 10 months ago? It's like telling the passengers to jump of the Titanic after its hit the bottom of the ocean! It's just a little late in the coming.....I won't say what I really want to say about the competence of that statement by Jimmy, but I will say that it's actually GOOD NEWS! The more fools (ok, I said it) that tell people to jump off the Titanic AFTER it has sunk the better. Analysts are almost ALWAYS WRONG. Jimmy was a good trader once upon a time, but he has become a fool, especially this past year.

I am watching to see if we get a big Hammer after a blow-off move to signal the short-term, and maybe even intermediat-term change in the markets. We need to see a big comeback on huge volume before I believe that it's over for now, that the selling is done for the near-term. I'm not going to get too fancy with any trades unless I see some clean setups, but until then, I'll assume the status quo, which is an historically volatile market.....