Panic Eases in the U.S. Markets

An overnight global market meltdown has U.S. Futures trading Limit-Down pre-market. The stock market is set for one of its biggest gaps down ever. Russia simply halted trading until next week. The Yen Carry Trade is being furiously unwound as investors world-wide stampede to safety.....

I don't like to use the term blood in the streets, but there's blood in the streets.....Maybe the VIX will actually spike above 100 today.....I speculated that if that happened it would be because of catastrophic levels of panic and selling.....The U.S. 30-Year Treasury Bond Yield dropped to its lowest levels ever, and Oil is down to the mid 60's despite the fact that OPEC announced that it will cut production.

I would like to be able to point to one single catalyst for the huge implosion overnight and this morning, but there isn't one. It looks more like someone rang the imaginary bell and that quietly started a death spiral worlwide. It's as if thousands of big-time money managers around the globe sort of mind-melded and began a super-freak all at the same time. This is the kind of day that happens when everyone sort of tunes in to the same bad frequency at the same bad time.....

This morning looks as ugly as when I watched the markets right after 9/11. It is as ugly as 1987. We may see a climactic blowoff, but the fear is so extroadinary world-wide that any huge bounce-back might not come right away. I would imagine that a lot of investors, and a lot of people will watch today's action with held breaths as they wonder if it's the end of all life as we know it. I expect tons of political and governmental type of rhetoric and "mental intervention" world-wide as "officials" attempt to soothe all the fear in the streets and restore the "confidence game" back to the financial markets.

I'm not going to even bother with support levels, but if you look at anything, you will want to look at a 10 year or 20 year chart at the minimum. We may see a huge bounce back today, but I doubt we will get it right out of the gate, and it may be that we don't get it at all today.....

You will really, really want to stay nimble today. If you do something, you will probably want to use the 5-minute and 15-minute charts for your swings, and you will probably (I can't believe I'm saying this) want to use the 1-minute charts to help time the entries and exits. If you aren't comfortable or nimble enough to do that, then either stay out today, or take smaller positions. If you see really clear setups on the 15m charts, then you could catch a swing that makes you a huge move in 30m - 90m, but look for clear signals and stay in front of your computer or pre-program your stops if you trade this today.

We are in for a very volatile day after a historically volatile month......We shall see what happens next...............

1:15 pm MT: The market made a very nice comeback late in the day, which seems to be the pattern these days. It was very, very encouraging that the Dow actually held the intermediate term lows today despite the world-wide panic and meltdown. I was watching this all day and I thought that the longer it held, the better chance there would be for another end-of-day bounce back, which we may have right now.

It will be critical for the market to hold this late-day bounce, and the Bull Flag on the 5m charts bodes well for that. We may chop a bit for the next 30 minutes, but if the market can close strong then the Bears will really be frustrated in their attempts to push the Dow and other indices through the intermediate term lows.

The "Beardicat" zone on the Dow and the SPX, incredibly, is still holding. The Naz had a huge gap down through the intermediate term lows and made new lows this morning. If the Dow and SPX can close strong, and the Naz can close above the previous three long lower shadows on October 10, 16, and 23 then the Bears will have been frustrated again. We'll see how we close the day, but this late day bounce is very encouraging, I personally would like to see it hold and close strong.

2:45 pm MT: Market Wrap: I didn't like what happened in the last 5 minutes of trading. It looks like several big institutions came in and sold just before the close in order to avoid weekend news risk. The Dow dropped about 150 points in that very end of the day trading. It was disappointing.....

On the bright side of things, the markets didn't do too badly considering the panic in the streets this morning and the futures trading lock limit down pre-market. The market is still holding the intermediate term support zone. It may be holding the zone with one less toe today, but it is still holding, and that's saying a lot considering the whole end of the world doomsday type of morning we experienced. Perhaps there is a light at the end of the tunnel. It sure doesn't hurt to have oil prices plummeting down, although it would be nice if the free-fall wasn't based on the panic over a global recession.....Still, any light that isn't an oncoming train is a good light.....and I'll take that.