Implosion Day Part Deux

On Friday afternoon more than an hour before the close I wrote about the price action being the worst case scenario for the Bulls.....

Pre-market futures are down sharply, with the Dow set to open in the 6,900's.....

Make sure to sell some of any puts you may be holding into the gap down, the Dow 6900 scenario is still on the table as far as I am concerned. However, the big problem with the closing candle on Friday being for the day, was that it was also for the week, and for the month. So the Dow 6900 syndrome may only be an intra-day wiggle, or short term phenomenon. Now the Dow 6,500 and even the Dow 6,000 are at risk (although I really don't like the thought of going that far down, and I really, really hope it doesn't, but maybe that's whats gotta happen).

Remember the good old days when the Dow in the 7,000's was considered incredibly oversold?.....

The culprit this morning is Financials again. This time it's a combination of foreign banks trying to stave off the complete socializtion of their businesses (for instance, Lloyd's of London is trying to keep the British government from taking over more than 50% of the company), and insurance company losses in America (AIG reported a huge, other-worldy 4Q loss of 61.7b which puts the insurance sector in doubt).

I've been watching the price action this morning and it looks like the Dow 6,920 is the first intra-day wiggle point. We'll see if this becomes the basing point for a while just like Friday. I expect some pushes and fades, some counter-moves and new legs down today, so stay nimble as always.....things are getting crispy fried charred on the short term, but it may not be done yet.....

The worst case scenario for the Bulls once again becomes price action similar to Friday. If that happens then the Dow 6,500 is at risk. However, if at some point today I see a huge intra-day spike up on volume, then I know the monkey rang the bell and all the Fundies are running for their "bargain of a lifetime" cheeze. The big difference between this cheeze and some other bear market cheeze is that the Fundies are realizing that the socialization of capitalism around the world means that this cheeze has too much mold on it, and a whole lotta "stuff" has got to be cut away before it's edible.....

7:50 am MT: Intra-day Update: It looks the the first rollover point is forming right now after the initial drop and first wiggle. Remember, when too many headlines hit about the Dow with a 6 in front of it, the Fundies may decide to go grab some cheeze, so watch the rollovers a bit - it might not last, but also realize that this could still go to 6,500 over the next couple of days. Strap on the seat belts, this day will see some action.....

7:59 am MT: Intra-day Update: There's the rollover, right on cue, just as I warned. Now it's a matter of seeing how far this goes, and what the price construction is for the next few hours.

8:01 am MT: Intra-day Update: The price action came right back, so the Dow 6900 Syndrome is still on the table. A move back above 6,970 right now and the market will probably follow a pattern similar to Friday morning, at least for a little while. A drop below 6,930 right now and the 6,800's are at risk. We shall see.....

8:11 am MT: Intra-day Update: The Dow didn't hold 6,930 so down it goes. It tapped in to the 6,800's almost immediately. The wild ride continues..... I have to take off now, I'll put out more updates when I can.

9:25 am MT: Intra-day Update: The market continues to slide off, which means that there is a reasonable chance that we see a bounce back intra-day in the next little while. If the move is extreme, with a lot of volume behind it, then the short term Daily chart downswing may finally be over. If it's lighter volume, the the crunch and grind continues.

The probabilities for a short term bounce back are starting to grow a bit, I can see the Bargain Cheezers starting to position themselves a bit in the hopes they can nail the bottom. I just wonder if they'll get the nail in the bottom instead. Nevertheless, it's important to see what the construction of the first intra-day bounce looks like. If the Cheezers decide to turn things, well.....they have all the money, so they can do whatever they want. For now, the slide continues, but the chance of a Cheezer Bounce is starting to grow.

10:20 am MT: Note: I will be subbing in VC Options in 40 minutes.

10:55 am MT: Intra-day Update: This is the best chance of the morning for a Cheezer Bounce right now. The price action is trying to round around, and there was a nice little failed signal to the downside. We'll see if some type of intra-day bounce forms here.