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A T-WAVES MARKET ANALYSIS
by Stephen Tetreault
February 11, 2008

I am expecting a chance for a continuation of the late buying into the close, as I expect some giddiness pre-market and into the open...as liquidity is being pumped into the system at record-rates...we are very near a top-again but according to the technicals we may pull back in the near-term but then resume this bear-market rally (time will tell) in my opinion and we will see the resumption of this downtrend again according to my wave analysis and timing analysis we have a potential inflection-market event (potential reversal) that could develop in and around 2-7 thru 2-13 now please do not misinterpret my call, as I had mentioned back on 1/21....I was then calling for a 8-18 day tradable bullish-trend reversal, I then stated that thereafter my bearish-friends will be provided with another great shorting opportunity; we that opportunity will shortly be at hand, in my opinion.

I believe the odds at 65:35 that the next leg down will take us much lower than this one has, and the fed-heads will be practically out of silver bullets to come to the rescue! **Watch the transports for an early directional bias change as well, they have already started to diverge from the bear-trend! Also please understand that the economic-data expectations as well as the earnings estimates have bee ratcheted down, they are so low even a snake could hurdle most of them!

There has been a lot of recent talk about a bear-market and a recession in the media well my readers have been on top of this development for year as through my writings and analysis they have known that we have been in a stealth and very-well manipulated and �silent economic crash� since Bush took, and the real culprit behind the curtain has been Dick the �shooter� Cheney and the Wizard of Oz Greenspam as the crash has been spurred courtesy of their rampant money-printing, credit inflation and their blatant manipulation dropping in value of our precious greenback, as if you plot oil in terms of real money, it’s priced about where it was seven years ago, a very deceiving-divergence, however the average American�s wealth has and is being destroyed rapidly, as currently you can buy about 30-34% as much in commodities (energy, food, etc) as you could in 2000, hence our economy and society has been ripped out right under out feet, all the while those responsible are heralded as saints by the media, worse yet the American public through a Pavlov-type-approach has been lead to believe that we are living in the best of times. It reminds me of the 1859-famous novel by Charles Dickens called the Tale of Two Cities (only now we could interpose the Tale of Two-Classes, the haves and have nothings) The book opens with the famous line " It was the best of times, it was the worst of times..." the novel tells a story of the shameless corruption, abuse and inhumanity of the French nobles towards the peasantry. The masses, oppressed for eons, rise up at last and destroy their masters.

I have been asked by several subscribers over the past several weeks about my longer term out look for our economy and markets�.well here it is�I believe we have already entered a recession�the fuzzy-math manipulators have just been fudging the numbers�I believe that this consumer lead recession will be a huge recession that could easily hinge on a depression; I believe that over the next several years the Dow will trade back down to the 7000-7500 level, the SPX will be cut almost in half, and the Nasdog will test the old relevant 2002 lows and unfortunately many stocks will fall by as much as 50-75% and this next bear-market will crush the masses. The lamebrains on the various bubblevision networks are now praising the Federal Reserve for taking aggressive actions to avoid recessions and the bursting of bubbles which they themselves created, and I find this an awful joke, as they insult at least my intelligence! The problem in a nut shell is that we should have experiences mini-recessions and boom-bust, and business-destruction-creation cycles during the past decade as is the normal evolution of a true and � FREe� capital-society, however through their manipulation, and the greed of the wall-street tycoons, bankers and various insiders, they have been just putting what I call Band-Aids on a patient that should have had its wounds cleaned, sutured and allowed to heal, now we have a patient on the verge of a massive heart attack that is about to hemorrhage and now they are bringing out the defibrillators and hordes of plasma in order to rescue a drying patient that they ignored when it only had a cold/flu, hence this attempt to stall what is a normal business and economic cycle could send us into a depression, one that they caused, and worse yet (knowingly�.I believe), now please understand that along the way as we enter this perfect force 5-huricane we will see brief periods of sunshine, and when we enter the eye of the storms all will be well, or so it seems, however those who have lived through mega hurricanes as I have know that the back side of the storms is twice as violent before it subsides! Meaning that we will not fall off a proverbial cliff like Wiley Coyote

The indexes rose across the board on Friday, capping their best week in almost five years, and the real impetus was Microsoft according to the so called market guru�s�.the markets took solace as microsoft was the primary booster to Friday�s euphoric action as they offered to buy Yahoo for $44.6 billion in cash and stock; their $31 per share offer represented a 62% premium over Yahoo's closing price on Thursday, and speculation abounded throughout bubblevision land that this could be the start of a wave of merge and acquisition plays in technology stocks especially as MSFt�s deal would be the largest technology acquisition ever, beating KKR's $26 billion acquisition of First Data Corp in 2007. The market's initial response was extremely positive, with futures spiking up big time premarket on the news. Of course Yahoo's board still has to accept the deal, which they said they are currently considering. The deal also has to meet regulatory approvals and the Justice department said it is interested in looking into the takeover's "competitive effects," so this is far from a locked up done deal!

MSFt�s wave of euphoric sentiment should have been significantly derailed, and it was but only briefly after the Labor Department released the non-farm payroll data and it should have sent shock waves throughout the markets (this dismal news should have significantly o ver-shadowed all other news but it didn't thanks to the onslaught of timing buy programs throughout the day, the data showed that for the first time since 2003; employers were significantly scaling back their payroll numbers) as the January nonfarm payrolls fell by 17,000 (a negative number) much lower than the 70,000-83,000 expected. The number was widely hyped by the talking butt-heads on the various bubblevision networks to not as bad at it seems, as December payrolls were revised higher to a gain of 82,000 from 18,000. Also, they incessantly stated that the number is still less than recessionary levels, when monthly payrolls decline 150,000 to 200,000 { More on the jobs data later}. Also providing some needed stimulus off setting the poor jobs number, was a positive release on manufacturing. The ISM Index, came in at 50.7, higher than December's reading of 48.4 and a bit higher than expectations as the consensus estimate called for a reading of 47.3. This was heralded as great news for the economy. Since the number is above 50, it indicates an expansion in manufacturing { see my full analysis below}

On Friday we also saw a wave of giddiness emerge again as shares of metal producers and miners contributed significantly to Friday�s euphoric rally after China (yes a communist nation) teamed up with Alcoa to purchase a $14 billion stake in Rio Tinto, the world's #2 miner (by market value at least). And that action spurred a wave of speculation throughout the sector as the SPX materials index rose a whopping 2.22% on the secession, helping to also propel the Russell-2000 significantly higher. The so called experts on the various bubblevision networks were immediately hyping the MSFt and RTP news as extremely bullish as they were shouting to anyone that would listen that these proposed takeovers demonstrates that equity prices are just low and so many firms are now selling at massive discounts. Well if you buy that crap, I have a huge bridge for sale; these moves were purely done out of survival mode, as each needed to secure their position in their respective industries and combat market erosion.

During a period wherein the Federal Reserve slashed their benchmark short-term interest rates by a staggering 125-basis points in just 8-days the Dow and the SPX notched their best weekly advances in just about (5) years, gaining 4.4% and 4.9%, respectively (Now before you jump for joy�the Dow started out the year at 13,265 and closed Friday at 12,743.19 still down by over 522-points, The SPX started the year at 1,469 and finished Friday at 1,395, still off 74-points on the year)� remember these indexes were taken to the woodshed and thrashed. I believe what we saw this week was a massive short-covering rally spurred on by the FOMC, MSFT and PPT as the indexes had fallen in a big way this month�SPX had fallen to 1270 on 1/23 (down 200+/- points in just 15-trading days) while the Dow had dropped to 11,645 on 1/23 (down 1620 points in less than a month). The Nasdog posted its largest one-week jump in over 18 months, finishing up 3.8% thanks to the panicking FOMC and MSFT�technology standouts included shares INTC (one of our value plays) which was up 3.2% on the week.

What was very interesting to note is that trading was very moderate as on the NYSE, we only saw about 1.79 billion shares exchanging hands, well below last year's estimated daily average of roughly 2.12 billion, while on the Nasdog about 3.10 billion shares exchanged hands topping last year's daily average of 2.47 billion. While we would expect positive breath I expected to see more�as advancing stocks outnumbered decliners by a ratio of about 7 to 2 on the NYSE and by 9 to 4 on Nasdog.

There's nothing like a good M&A story being spun and hyped incessantly to get things rolling, and the speculation running. The markets still have a long way to go in my opinion to discount even a mild recession. We even saw on Friday that the indexes completely ignored news that the Justice Department said it may review the antitrust implications of Microsoft's offer for Yahoo. Still, the bid spurred speculation that mergers and acquisitions will stoke further rallies as corporate buyers exploit falling stock prices (too bad) their cash reserves have been depleted buy their manipulative stock-buy-backs.

Nevertheless we saw that through the FOMC�s massive market support action by cutting 125-basis points in just 8-days (This action represents one of the most aggressive Fed-head rat-cuts that we have seen in over 25-yearsand I believe this type of panicking policy response indicates that the central bankers are much more concerned about either the status of their friends balance sheets (banks) or the economy or the banking system in general than they have publicly acknowledged), also we saw evidence of the PPT�s presence and a huge short-squeeze that the SPX rose 4.9% this week, mitigating its yearly loss to just 5.0% the Dow gained 4.4% this week bringing their yearly losses down to just 3.9% and the Nasdog rose 3.8% this past week and is now only down on the year by 9.0% now. Let's face it this rally this week was sparked stoked by the FOMC�s second interest- rate cut in just 8-days as the lamebrains continued to put their banking buddies fortunes ahead of the American public�s. They are continuing to hint/signal their willingness to reduce borrowing costs again to prevent a recession; but this is just smoke and mirrors, as their efforts are only aimed to bail out banks, brokerage firms and wall0street on the backs of Americans.

Stocks and the indexes were also buoyed this past week when we saw that New York Insurance Superintendent Eric Dinallo was/is trying to organize a bank-led bail-out/rescue of Ambac after mortgage-related losses cost the bond insurer their AAA credit grade from Fitch Ratings. Headline statements and blurbs were incessantly hitting the airwaves of a bail-out all week long and this helped keep a floor under the markets and forced short to cover�and example of which came out on Friday �While we cannot discuss specifics, there are a number of developments relating to the bond insurers,� Dinallo said in a statement; that �We are continuing to positively communicate with all parties to help them reach firm deals as soon as possible.� As a result shorts were forced to capitulated as the squeezes were on in earnest as massive speculation about whether the guarantors will maintain the AAA credit ratings they rely on to insure $2.9 trillion in securities was now seen in a positive light!

Their credit scores have come under scrutiny (and its about time as these ratings agencies are not only complacent they are down-right manipulated by their own greed and as such have cost investors billions) by ratings services such as Moody's, Fitch and S&P on concern these insurers won't have the capital (they never did, so how did they ever get AAA credit standing in the first place) to pay off mounting claims stemming from falling values on investments backed by subprime mortgages. Moody's Investors Service said on Friday that they may downgrade some bond insurers in the next few weeks. Write downs and credit losses following the collapse of the subprime mortgage market have exceeded $150 billion for 32 of the world's largest financial institutions, and in my opinion this is just the tip of the proverbial iceberg as I believe they will have to write down between 320-450-billion more in the months and quarters ahead!

On Friday the markets totally ignorer a Moody�s release that stated that some bond insurers may lose their highly coveted AAA ratings and go into �runoff,� leaving fewer active players in this $2.4-2.9 trillion industry. The ratings agency (may finally be getting their proverbial head-out-of-their-butts as they also increased their estimate of losses on subprime mortgages originated in 2006 to a range of 14% to 18%, up from 6.6% to 8.5% late last year. Please take note of this as it is very important because these higher subprime losses will likely filter/feed through into mortgage-backed securities and also hit more complex securities known as collateralized debt obligations, or CDOs. We have seen in recent months that Bond insurers have already suffered mega losses from guarantees they sold on CDOs and there's more losses to follow in my opinion as these were just the tip of the iceberg. It's likely that these firms may be unable to restore financial strength to levels consistent with even a Aaa rating (they should be rated junk already in my opinion). Further downgrades will/could possibly lead these firms to pursue a narrow business focus or enter what is called a runoff�.a runoff occurs when an insurer stops taking on new risks and slowly shuts down, allowing current policies to expire while attempting to pay claims; but most often stalling as long as they can. Moody's said it will finish a review of its ratings on bond insurers by mid-to-late February (D-day for the markets), they are stalling as they are hoping and praying for a massive bail-out) but they also noted that it may take rating actions sooner if some companies appear to be struggling to raise new capital.

Remember folks when in doubt CASH is king. so please trade cautiously and be quick to protect profits. Please remember folks there are usually 7-8 bullish (participants) to every 2+/- bearish traders/investors, so the propensity for bullishness is almost always stronger! However the reason that the market drops 4-5 times faster then it goes up is that liquidity and lack of buyers due to fear, can feed on itself very quickly like a plague or a quick acting cancer. So prepare yourselves for a potential rollercoaster ride

ECONOMIC FRONT

On Wednesday that FOMC decided today to lower their target for the federal funds rate 50 basis points to 3.0%. They stated that: Financial markets remain under considerable stress, and credit has tightened further for some businesses and households. Moreover, recent information indicates a deepening of the housing contraction as well as some softening in labor markets.

The Committee expects inflation to moderate in coming quarters, but it will be necessary to continue to monitor (key word to do nothing) inflation developments carefully. Today�s policy action, combined with those taken earlier, should help to promote moderate growth over time and to mitigate the risks to economic activity. However, downside risks to growth remain. The Committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risks.

We saw this week that our economy slowed to 0.6% growth in the fourth quarter (a preliminary reading) that indicated that the U.S. economy barely grew in the fourth quarter, pulled down by a crumbling housing market and heightened caution and worries by consumers and businesses, according to the Commerce Department. The 0.6% annualized growth rate in GDP was distinctly lower than the 1.1-1.2% expected. We saw a massive drag in GDP associated with inventories as the draw-down was far greater that expected. GDP hasn't been this slow since the end of 2002, when the economy was struggling to recover from the recession a year earlier. We saw that consumer spending and business investments slowed in the fourth quarter, while investments in homes fell at the fastest rate in 26 years�.the drag was that businesses reduced their inventories, while exports grew at a slower pace as well.

The economy grew at a 4.9% pace in the third quarter, and this drop was a stark reversal�.for all of 2007, GDP grew 2.2%, the slowest growth since 2002, though GDP increased at a 2.9% rate in 2006. Fourth-quarter GDP growth though it was not negative, was very weak, and prospects for the first quarter are not materially any better at this juncture; and though technically we may not yet be in a recession, growth has dramatically stalled and is staring to turn into a negative trend.

A FED-Contagion�as growth slowed, core inflation heated up, as the core personal consumption price index rose at a 2.7% annual rate in the quarter, far above the Fed's goal of 1% to 2% and the fastest pace of inflation seen in over six quarters. In the past year, core inflation, which excludes volatile food and energy prices, has trended between 1.8-2.1%. But as we saw they once again sacrificed Americans for those greed wall-street firms like GS, BSC, LEH, MS, C, BAC and JPM as the Fed signaled that they believes the risks to growth far outweigh the risks of higher inflation (they live in a plastic bubble-world) and they went ahead and cut rates again today aggressively to get growth back on track according to their statement.

The GDP report indicated that prices of all consumer goods and services rose 3.4% in the past year is also an inflationary data point that is extremely worrisome. The combination of weaker growth and accelerating inflation puts the fed-heads in a huge boxed in corner what Greenspam use to call a quandary: Cut interest rates to boost growth, or hike rates to stop inflation.

Today�s GDP report is the first of three estimates/revisions of fourth-quarter GDP as our pro forma fuzzy math government manipulators will revise the figures in a month with more up-to-date data, including figures on inventories, construction spending and trade data for the Month of December.

GDP for 2007 came in at $13.84 trillion, though not adjusted for inflation�meanwhile real disposable incomes increased 0.3% in the final three months of 2007, and the personal savings rate was 0.2% of personal income, the lowest in five quarters�.this is where the major contagions reside.

Consumer sentiment has significantly fallen off this year and as such we should anticipate a retrenchment and a pull back in discretionary spending�.consumer sentiment is significantly below last year's levels and overall risks that a recession develops remains high unfortunately according to a survey released Friday by University of Michigan.

On Friday we saw that the sentiment index rose to 78.4 in January from 75.5 in December; expectations were for a reading of 79.0; as such the market pundits were delighted, however the preliminary-mid-January reading was 80.5; the reading of 79.00 is in stark contrast to last years reading of 96.9; a drop off of 19% year/year according to the survey.

I was utterly amazed at the giddy euphoric, spinning of this release by the talking-buttheads on the various bubblevision networks, as no one should take comfort in the fact that consumer confidence increased slightly in the January survey, when you reflect upon the underlying data as since we saw the largest percentage/proportion of consumers in over 20-years reporting financial distress, especially households with incomes below $75,000, and those below the 35,000 threshold were at risk 5-times more than those at the $50,000 level or above. The survey reported that households with incomes under $75,000 were twice as likely as higher-income groups to report that higher food and fuel prices, as well as smaller income increases, had worsened their finances

According to the survey�s data most consumers feel more vulnerable because of higher food, gas, and heating costs. Furthermore more many consumers are very-concerned about their employment situations; and income uncertainty has hurt durable-good purchases and vehicle-buying (as plans for future purchases have been dramatically curtailed). And for the first time in the nearly 20-years that the question has been asked, the number of homeowners reporting that their homes had lost value exceeded those who reported higher home values.

� The current-conditions index rose to 94.4 in January from 91.0 in December; however in January 2007 the reading was 111.3.

� The expectations index in January increased to 68.1 from 65.6 in December; but than again last January the expectations index hit 87.6; a large drop off, and not a soul on CNBC would address this data.

Home values a concern�..Earlier this week we saw that the Case-Shiller home-price index reported that the decline in U.S. home values accelerated in November, with prices falling for the third month in a row in all 20 cities tracked by the index. Well the sentiment report reflected that malaise�lets face it the housing market will not benefit as quickly as in the past from cuts in interest rates given the near universal rise in credit standards as well as continued declines in home values making even refinancing more difficult; as such this overhang will continue to weigh negative on consumers.

Buying plans for autos/trucks have also been and will likely be negatively impacted more as according to the survey, attitudes in January about future auto/truck purchases were the least favorable since the 1990-1991 recession, and this is very-negative! We also saw confirmation of this sentiment as earlier this week, the Conference Board reported that U.S. consumer confidence declined in January, giving up much of the prior month's gain, with consumers �quite downbeat� about the near-term future. Over the past decades, whether inflation was much higher or lower, or incomes grew faster or more slowly, there has never been such a wide divergence in the experiences across income groups, the survey indicated.

A DISMAL Employment Report was rallied instead of sold?

On Friday we saw that the non-farm payroll report showed a net loss in U.S. nonfarm payrolls for the first time in over than four years�nonfarm payrolls fell by an estimated 17,000 in January, according to our pro forma fuzzy math manipulative Labor Department; this is the first decline since August 2003. Our unemployment rate, went the other way as it fell, trending down to 4.9% from 5%. This drop in the number employed was in stark contrast to the increase of 85,000 jobs that had been expected. The negative jobs numbers may not be proof un to itself that a recession is here, but it is a clear warning that our economy is teetering on the edge of a so called recessionary cliff.

What disturbed me greatly (and went under-reported as usual on the various bubblevision networks) was the over all weakness in hours worked and wages paid as it indicate sub-par growth in American�s personal income in the coming months, and plays right into my premise that the American Consumer is practically tapped out and exhausted their spending especially discretionary. So many corporate leaders and Wall-Street self professed masters so quickly forget that income is the fuel that drives spending and real demand.

When we look within the report itself and ignore the headlines and hype we see that the labor market has clearly deteriorated: Job growth has averaged just a mere 41,000 over the past three months, compared with an average of 109,000 in the first quarter of 2007�.now lets put this in perspective we need to generate 150-165,000 a month just to keep up with new entrants. Revisions to the payroll data didn't alter the picture of the past few months; as the numbers in November and December were revised higher by a mere 9,000 together.

The average hourly wage for January increased a mere $0.04, or 0.2%, to $17.75, hell this doesn't even cover a typical family�s gasoline bill-increase; and it was short of expectations. Hourly wages are up just 3.7% in the past year, and on a real-inflation adjusted basis are lagging miserably. The weakness in employment report was widespread. Only retail, health, education and the leisure sector added workers.

� The number of manufacturing jobs as tracked by the Labor Department declined by 28,000, marking the biggest drop since August (Now this contradicts the ISM survey, so which is right?) Factory jobs have now fallen for 19 straight months. Over the past year, manufacturing has lost between 269,000-280,000 jobs and these are the high-paying benefited positions, not your Wal-Mart type positions.

� January's construction jobs dropped by 27,000, the seventh straight monthly decline. Construction has lost 284,000-290,000 jobs since its peak in September 2006.

� Financial-sector employment fell by 2,000 in January, with declines in many sectors (and the real job losses are yet to be accounted for as they are just now being triggered in a huge wave).

� Real estate dropped 5,000 jobs, while the mortgage sector has lost 111,000 jobs since October 2006.

� Jobs in services increased 34,000, as retail jobs rose 11,000�.I'm sure that those displaced are delighted to have these jobs as substitutes for their lost jobs

� Health care had a large increase of 27,000 jobs. Over the past year, the health sector has added 367,000 jobs, accounting for more than one-third of the growth in payroll employment

� Now even the government is coughing up jobs�to the tune of 18,000 jobs.

WEEKLY CLAIMS REPORT

In the week ending 1/26/08, the advance figure for seasonally adjusted initial claims came in at 375,000, an increase of 69,000 from the previous week's revised figure of 306,000. The 4-week moving average came in at 325,750, an increase of 10,250 from the previous week's revised average of 315,500. The advance number for seasonally adjusted insured unemployment during the week ending 1/19/2008 was 2,716,000, an increase of 47,000 from the preceding week's revised level of 2,669,000. The 4-week moving average was 2,705,000, a decrease of 9,500 from the preceding week's revised average of 2,714,500.

UNADJUSTED DATA�..the advance number of actual initial claims under state programs, unadjusted, totaled 366,891 in the week ending 1/26/2008 a decrease of 48,258 from the previous week. There were 359,959 initial claims in the comparable week in 2007. The advance unadjusted insured unemployment rate was 2.4% during the week ending 1/19/2008, a decrease of 0.1 percentage point from the prior week. The advance unadjusted number for persons claiming UI benefits in state programs totaled 3,256,984 , a decrease of 15,016 from the preceding week. A year earlier, the rate was 2.4% and the volume was 3,103,449.

It's the highest level since early October and the largest increase since September 2005. The jump was much larger than expected. The consensus forecast of economists was for claims to rise to 320,000. Claims in the previous week were revised to an increase of 6,000 to 306,000 compared with the initial estimate of a fall of 1,000 to 301,000.

The Housing Market is still on a downward crippling path the Case-Shiller home price index indicated on Tuesday that a decline in U.S. home values accelerated in November, with prices falling for the third month in a row in all 20 cities as prices dropped a record 5.9% in November. In the past three months, prices fell at an annual rate of 16.2%. Among those 20 cities, prices have fallen a staggering 7.7% in the past year.

For the original 10-city index, which has a longer history, prices are down a record 8.4% in the past year, exceeding the drop recorded in 1991. Home prices fell in all 20 cities in November, led by a 3.6% drop in Los Angeles.

With huge supply overhangs and mortgage financing becoming tougher to get home prices are going to decline considerably further in the quarters ahead, most likely to a double-digit pace on a year-over-year basis before too long�and the markets haven't even begun to price this contagion into the mix in my opinion! "We reached another grim milestone in the housing market in November," said Robert J. Shiller. He noted that prices fell at a record pace in November in 14 of the 20 cities. In eight of the cities, prices have been falling for more than a year. The Case-Shiller index, which tracks multiple sales of the same homes, is considered by many observers to be the best gauge of national and metropolitan-area real-estate values; and the numbers are dismal!

Nevertheless we saw some positive data this week that suggests that homeowner�s applications to refinance their existing loans surged again according to the Mortgage Bankers Association's latest survey of filings, as refinancing rose 22.1% last week compared with the previous week. According to the survey released on Wednesday, the report showed that refinancings accounted for 73% of the total number of mortgage applications filed during the week ending 1/25/08 was up from 66% the previous week. Whereas applications for mortgages to purchase homes, on the other hand, decreased by a seasonally adjusted 17.7% on a week/week basis. We saw that applications for mortgage loans rose a seasonally adjusted basis by 7.5% last week, compared with the previous week. And applications were 70.7% higher compared with the same week in 2007. The MBA's four-week moving average for all loans was up a seasonally adjusted 16.7%. It appears that this rush of refinancing activity comes as mortgage interest rates have fallen over the past several weeks. But according to the MBA survey, rates actually increased this past week as the average rate on 30-year fixed-rate mortgages rose to 5.60% last week, up from 5.49% the previous week. Fifteen-year fixed rate mortgages averaged 5.04%, up from 4.96%.The rate on one-year ARMs increased to 5.70%, up from 5.51%. ARMs again decreased as a proportion of overall filings, falling to 8.6% last week from the prior week's 9.3%.

Our friends across the pond are running into trouble as well�.as Approvals of mortgage loans in the United Kingdom dropped to 73,000 in December, falling from 81,000 in November and underperforming the six-month rolling average of 100,000, the Bank of England reported on Wednesday, analysts were expecting a figure of around 79,000. The BoE found that total net lending to individuals rose by 9.1 billion pounds during the month, slightly off the 9.2 billion pound pace seen in November. December net consumer credit rose by 600 million pounds, about half the gain seen the previous month. Net credit card lending was up by 300 million pounds, while other loans and advances also rose by a net 300 million pounds, the bank said.

On Friday we saw a Bullish ISM manufacturing report; as the factory sector was surprisingly strong (this report sure fooled me as it contradicted other anecdotal data) nevertheless the January report showed that we experienced expanding manufacturing after a contraction in December. The ISM index rose to 50.7% from a reading of 48.4% in December. This was a seasonal blip I believe, just the same the survey (key-word = survey) indicated that eight of 18 manufacturing industries expanded in January, led by apparel, petroleum and food products. However we saw that the new orders index remained below 50%, but improved by 2.6 points from the December reading indicating a slower pace of decline. What was strange is that the production index jumped by 6.6 points to 55.2%. Export and import orders increased. This is something of a near-term seasonal-holiday relief, as I doubt very much that it means the ISM-manufacturing has bottomed out.

In a separate report we saw that spending on U.S. construction projects fell by 1.1% in December as outlays on private residential construction took another tumble, no sign of relief yet the homebuilders have rallied hard this past week (hence a huge disconnect) Year over year, construction spending is down 2.3%. The overall drop was larger than expected by however there is in my opinion huge downside to come, many were looking for a decline of 0.5% in December; we also saw that spending on home construction declined by 2.8% in December after falling by 3% in November.

Earlier in the week, the Commerce Department reported that sales of new homes during December fell to their lowest level since February 1995. Meanwhile, sales of existing homes fell to their lowest level since the NAR (National Association of Realtors) began collecting data on existing home sales in 1999. They stated that the survey indicated that consumer debt levels are near historic highs and home values continue to decline. I expect consumers to continue to rein in their spending during the months ahead; as I have repeatedly stated these past months. In light of the fact that consumer spending accounts for approximately 70-73% of the output of goods and services in our economy I expect the economy to continue expanding if at all at a very anemic rate. So, I strongly urge you to not get caught up into the current stock market hoopla by thinking that the bad news is already behind us and that stock prices will continue to rebound during the coming weeks.

EVENTS to watch for as they may move markets or sectors!

Monday

Tuesday

Wednesday

Thursday

Technically Speaking Analysis Week of 02/04/2008

A Real Dismal-Start to the NEW-Year

A while back, I wrote up what I thought to be a very-clever analogy of what I believe is happening to the markets right now, and the premise was one of my favorites cartoon�s when I was a young man�.it featured a non-speaking Roadrunner and the incessant and persistent antics of a numb bloodthirsty-greedy character called Wile E. Coyote who was obsessed with catching the Road Runner (riches). And to the best of my knowledge the poor coyote never succeeded; day in and day out he tried and tried but was badly battered and burned for his efforts�he was crushed, flattened and blown-up, but oh so often he was seen falling off a cliff!

His persistence did teach me an interesting lesson of physics (not a true concept mind you) that we can apply to stock markets and particularly soaring ones like the current parabolic rocket-booster market we enjoyed this past year. In almost every episode, the battered coyote would invariably pursue his elusive quarry off of a proverbial cliff; and it became clear to the audience that the coyote was headed for a serious fall; and they would be shouting you fool look out!

The coyote; however, was blissfully unaware of his circumstances as he was oblivious, due to his emotional blindness (trying to catch his prey, and in the case of the markets chasing performance and riches) and it was a riot as he so very often at least for a brief period of time he broke multiple laws of physics (I learnt these lessons the hard way later on in life) as the coyote continued to churn his feet, and due to cartoon magic he remained stationary as he was somehow levitating in the same spot, indefinitely free from all harm... until he looked down and saw his dangerous, and precarious state and what lurked below. After looking down, the impossibility (even absurdity) of his current state of being became extremely clear; and if you remember the cartoon as I do you would remember the shocked look on his puss; he would gulp, usually produce a hastily assembled placard featuring the phrase, oh, no and then fall like a rock into the void below; and sometimes to make matters worse a huge bolder would be following him down to smash him even harder into bits at the bottom.

Well folks this is exactly what happens at bubble tops I've seen it before, throughout history, especially in the last mega bubble created 1997 to early 2000 when people were paying 150-250 P/Es for stocks based on silly ass metrics such as "eyeballs" and �clicks� we were told then on a daily basis by those then talking buttheads being pranced daily on the various bubblevision networks that those high valuations would be easily be worked into as future earnings would be fabulous (sound familiar yet my GOOG friends) and that these were the very best investing times of our lives; so that we should back up the proverbial truck buy-buy-buy as the bull-train was pulling away heading toward the land of milk and honey.

The so called experts for the most part�not once sounded any signals of caution nor did the so called great market guru�s warn the investing public (their clients that they lured into the train ride) of the then force 2-hurricane looming in front of this so called train of bliss (we will soon become embroiled in my opinion in a mega force 5-huricane, but that is a different analysis, for another day) �no they were so darn busy hyping and selling this bull-market nonsense and spinning the dot-com and technology stories of the day, they were also embroiled in an effort to suck in the next herd proverbial bag-holders (they of course are masters of working hype and spin doctoring and they worked their magic very well) they were hunting and luring in the next herd of sheep to get fleeced�.after the debacle to hear them speak they were just plain unaware of the perfect bear-market storm that was brewing�how stupid do they really think the public is�well from my vantage point they surely maximized their gains.

We have seen last year that the global markets have also been in a proverbial mania market mode�as the Shanghai Composite (SSE Composite Index), India (BSE SENSEX) the Latin American (IBOVESPA SAO PAULO) markets and in general the global markets, even the Euro-land express along with out own indexes had in my opinion in 2007 been running off the cliff just like the coyote did for quite some time **and I had warned you all then of the potential fall and massive sell-off that was looming on the horizon** as the markets with out any-concern for valuations, and sensibility continued to hit new highs weekly, despite the crumbling housing market the subprime-slime contagions and masked economic warning, business cycle earnings and general geopolitical uncertainty that were pointing to very rough times ahead and a few of us conscious investors and traders that heeded my warnings they prospered ( our shorts on the homebuilders alone returned massive profits).

At one point I was growing deaf from the thunderous bullish roar, and had to shout my warnings over the roar of the bulls parting like it was 1999. But most investors and traders unfortunately took on the position like the numb-nut coyote, closing plugging their ears and never listen to reason, as they put on their rose colored glasses; they were so blinded by greed they only saw their prey (the promise of riches) they did not see the dangers lurking below (they again became bag-holders like those retail investors did in 1999-2000) Most investors today are still far too engrossed in their pursuit or riches to see the economic conditions and global growth contagions clearly�however they will be forced someday to look down and then they will engulfed in reality as they see the danger awaiting them, but it unfortunately for so many it will be to late for them to react to protect their savings and�as the proverbial plunge will catch most by surprise�many will take a vacation, they will head for the land of denial when this unsustainable mega credit/debit bubble breaks�.hopefully the air is expelled gingerly, but with all these bail-outs and massive debt loads both individual and governmental I doubt it�as if it does pops, then it’s a look out below scenario as the cries from co-called coyote-investors that just discovered that they ran off a proverbial cliff break will be a curdling and deafening cry, and those that do not suffer from short-term memory lose will quickly remember what happened in March of 2000. There is ample historical data that concludes and shows that Bear-Markets follow long drawn-out shifts in overall economic and business fundamentals, but they do not implode all at once nor do they go straight down like a falling stone. In the three years from October 1929 the Dow fell about 90 per cent, but it enjoyed five rallies of between 16% 48%. In the three years after March 2000, the Nasdog lost almost 80% but during this period we still had several 4-5 rallies of at least 18-22% during the down-trend�.here is a brief reminded for those who do suffer memory losses or who were not around:

� The DOW (was the first culprit to crack) fell off the cliff on 1/14/2000 after hitting an intraday high of 11,908.50 (we well above those levels today) and its first stair step bottom came after 33-trading days (3/13/2000) when it posted a near-term bottomed at 9,670.07 a whopping drop of 2,238 points in less than 46+/- trading days�.buts its different this time right folks, this could never happed again right as we are not in a bubble-mode in the credit/debit cycle as we, as professed on CNBC and the various hyping media bubblevision financial media channels. by the way we saw bear-market rallies during this period as well, and the cries were that the bear-was-dead so many times I lost counting, and the Dow bleed red for many months till bottoming at 7200+/- in October of 2002 and that bottom was test before we started this rally in March 2003

� The Nasdog fell off the cliff on 3/10/2000 after hitting an intraday high of 5,132, and its first stair step button came after 53-trading days when it posted a near-term bottomed at 3,042 after a whopping drop of 2,090 points in less than 53+/- trading days (can’thappen again right folks these are different times) All it took was a few so called coyote investors who looked down and panicked at the dangers below, then others followed by hitting the sell-buttons then another bunch then another and whoosh, we were in a cascading-water-shed event�the panic associated with fear due to the sickening plunge, went into what I called a full swing mode�.. by the way we saw bear-market rallies during this time as well, and the cries were that the bear-was-dead so many times that I quit counting�.and the Nasdog bleed red for many months till bottoming at 1108+/- in October of 2002 and that bottom was test rear tested several times before we started this rally in march 2003

�The SPX fell off the cliff on 3/24/2000 after hitting an intraday high of 1,552.87 (we are close to these levels today), and its first stair step bottom came after 33-trading days (5/10/2000) when it posted a near-term bottomed at 1,375.15 a whopping drop of 177 points in less than 33+/- trading days�.buts its different this time right folks�by the way we saw bear-market rallies during this time as well, and the cries were that the bear-was-dead so many times that I quit counting�.and the SPX bleed red for many months till bottoming at 775+/- in July of 2002 and that bottom was test several times before we started this rally in March 2003

Over the last couple of weeks I have made several references to a relief rally (a process to eliminate the pressure of the overselling and pure pessimism) these relief rallies make the bulls feel over confident and giddy. If this is a bear market there will likely be several great relief rallies along the way and we could be in the final innings of this giddy rally.

PLEASE NOTe�.this is the type of moves to expect during a bear-markets as the relief rallies are quick and sharp�.as a reference�.on April 14, 2000 the SPX hit and intra-day low at 1,338; then in just a week and a half later on the 25th the index had gained a whopping 139+/- points as it closed at 1477, now that was a very nice 10.3% rally not a bad return at all, and those on the various bubblevision networks were besides themselves with giddiness the next interim low was set on 5/23/2000 at 1373; then within 2-months on 7/19 it closed at 1510, a move of 9.9% over two months�and the stories were all over the airwaves that the BEAR-was-DEAD�.On April 3, 2001 SPX posted a low of 1100 and panic was growing. On May 21 it closed at 1312, a huge mega relief rally of 19.2% rally that no doubt made the bulls giddy with glee�then on 7/23/2002 SPX traded down to 775 on an intraday basis, a closing at 797 and within a month it closed at 962, another 20.7% relief rally then it rolled over to 768 into October 2003.

As I have written about before....a decade-long bull market is a huge rarity and in this environment is as likely as hitting the power-ball number. Historically, most bull markets have run their course in 44-54 months and as such this one was extremely overextended and as I said last year was on its last extended legs (if it were a cat it would have already used up 8 of its proverbial lives). But just seven years after the great bull market of the 1990s came crashing down hard, I continue to see way too many some seasoned investors and new-hyper greedy hedge fund managers once again being lulled into (or forced due to extreme overleveraging) believing that we are still in just a little correction as the Fed-heads are here to rescue us and will ensure that they will help propel us up into another period of prolonged gains. Such a blatant disregard for the economic and business cycle, and the lack of domestic investments along with historic levels of deficits gives me a sick feeling.

A HUGE potential Contagion Yet to surface and be made public

No one is talking about the hedge fund contagions that I think are growing exponentially�simply if these hedge funds were joined they would be the eighth-biggest economy on the planet (Hedge funds are private investment funds, primarily organized as limited partnerships so in essence, these are legal betting syndicates for the very rich). The amount of estimated monies that they handle, is mind-bogglingly large; according to the IMF's best estimate the value is in excess of $1.4 trillion dollars and many industry professionals place the figure at over 2.2 trillion) and by their massive overleveraged bets they have the potential to derail even large economies, and have the potential to crash the entire global financial system. Worse yet they are basically unregulated and beyond supervision/regulation this is an extremely dangerous situation in my humble opinion

When Helicopter Bernanke, was questioned last year by the US Senate banking committee about whether derivatives (complex financial instruments liberally used by hedge funds) should be regulated, he stated that �Derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and use them properly.� What a farce that statement is� as this statement in my opinion hinges on admission that regulators really don't have a clue what is going on and are therefore powerless to regulate these funds. Given their sheer size and increasing influence, on the global markets this is a huge contagion and makes me extremely concerned and scared.

The major concern that I have is that the key premise and desirable features of these funds are that they trade in risk and they are barely regulated and because they answer to nobody but themselves, hedge funds have side-stepped regulation and have basically conducted business like licensed crooks. They love risk and their main tool for pursuing returns like a tiger pursuing game is �leverage� or should I say extreme leverage, as they borrow (carry trade is a primary example) to play the markets and seek higher returns. It is not unusual for a hedge-fund investor to control $100-120 million in securities and investment instruments with as little as $5-6 million in collateral. Of course, that means that when a bet that they have placed goes wrong, it goes take on a huge monstrous contagion as it spectacularly dissolves. Let's put this into perspective if these hedge-funds and their overleveraged positions in the market are 20+ times the cash they actually hold, their potential impact on the world financial system is greater than that of our yearly GDP.

As I stated last week I heard rumors of about possible problems at several large hedge funds again especially these so called quant funds. We have seen in the past that large declines in the markets have resulted in many large and not-so-large hedge funds nursing significant losses; and many who were distinctly overleveraged could be sitting on the edge of a proverbial cliff, and with the markets also embroiled in a massive wave of volatility in recent weeks, the concerns are not unfounded. Volatility is like a fast acting cancer for quant hedge funds; as these funds primarily utilize computer models to generate trading ideas; and a large number use a market-neutral approach, which aims to balance long positions with short term trades; while other black-box programs are so-called statistical arbitrage funds, which analyze historical relationships between related securities, commodities, bonds and other often interrelated instruments and trade these instruments when the quantified relationships get out of balance.

Many of these funds were hit hard during last summers wild-volatile trading spree where we saw the markets significantly correct in July thru August as forced selling due to redemptions by many other fund managers seriously disrupted these so-called historical relationships. And as I have seen so many times, these overleveraged funds are historic at taking risks that when they are wrong can implode like an �A� bomb.

The problem resides in that so-called quant-funds are very popular among hedge-fund investors, and so many of these funds-managers in this type of hedge-fund business model have similar positions (due to these calculated relationships) and they, through greed utilize huge amounts of leverage through borrowed monies to increase their positions as they chase returns (the carry-trades have been a huge source of funds in the past). Here in lies the problem as these hugely overleveraged hedge funds can implode very quickly as the leverage they utilize to chase big returns can magnify even small losses. Some of these hedge funds also have relatively permissive redemption periods, allowing investors to take their money out every month, with just 10-30 day�s notice or so.

So the next logical assumption is that if the huge losses that we have incurred recently are not very-quickly mitigated or reversed by a nice rally�.we could start to see a triggering of investor redemptions, which will lead many funds to liquidate their positions. That, in turn, puts significant negative pressure on the historical relationships between these related instruments and securities, and as so often is the case we have seen that one-fund�s redemptions can seriously and adversely impact another-fund in the space or in a related-relationship� and since so many players attempt to exploit the same relationships, and they are all hit with redemptions and forced to liquidate at the same time, the most over leveraged funds get hit the hardest, as the forced redemptions create a liquidity squeeze which so often triggers a multi-chain reaction that creates a huge swell of selling.

Stock prices have/had rallied sharply over the past two weeks, in anticipation of and in response of the historic Federal Reserve rate cuts by 75 basis points on 1/22 and by another 50 basis points on 1/30. However, my indicators strongly suggest that stocks will continue to trend lower over the next six months. In fact, my models indicate that our equity markets have now entered a bear market and that the indexes are headed significantly lower during the months ahead. I therefore urge you to ignore the recent hype about the recent advances in the major stock market indices, as my research indicates that those advances are nothing more than bear market relief rally, and as I have so often written these rallies can be extreme and violent. One reason for this massive relief rally was that way to many people were leaning to the same side of the proverbial boat as Individual bearish sentiment was at the highest levels seen in over 8-years and far worse than it was in early 2003, when stocks started their rally; also many professional investors surveys indicated extreme negativity (although they are not quite as negative as they were last summer), and huge bets were placed in the options markets showing an extreme desire to protect against further decent; also overall short interest was very high as the NYSE short interest thru the use of ETF's and hedging against a meltdown was extremely high. {Nasdaq Short Interest, NYSE Short Interest} and when we put these conditions together we get the perfect-brew for a mega short squeeze!

The Fed's rate cuts are only bandages. They'll succeed at weakening our precious greenback against foreign currencies, and that encourages foreign governments (Sovereign-Funds) to buy American institutions at fire-sale prices, and these very greedy bastards (banks and brokerage firms) are prostituting themselves around the globe, in search of funds to keep their lies from fully surfacing! From 2000-2002 stocks slid slowly down the slippery slope and we all know that for many investors the pain was excruciating. Hence I am suggesting that you consider a shift to cash or investing in mutual funds or exchange-traded funds tied to the inverse of the major stock indices would be wise. Inverse ETFs go up when the index goes down and leveraged inverse-ETFs go up twice as much in the same situation. The next shoe to droP could come in late February when insurance companies have to come clean at least for the most part, as many will be forced to fess their under water holdings and exposure within their various portfolios. And from my vantage point these disclosures will be huge-negatives for their stock prices and bond ratings will be negative impacted. Two ways to diversify and profit from any unsettling financial-services news ahead: Sell iShares Dow Jones U.S. Insurance Index Fund (IAK) short, or buy the double-beta inverse ETF ProShares Ultra Short Financials ETF (SKF).

Although the Dow has rallied 772 points since falling to its lowest level in more than 15 months 1/22, all of the major U.S. stock market indices have merely rallied back to their respective overhead price-resistance areas and are currently trading significantly below their long-term 50/200 day moving averages {Dow 50sma = 12,973, 200sma = 13,363; Nasdog 50sma = 2,545, 200sma = 2,608; the SPX 50sma = 1,429, 200sma = 1,484}; In addition, according to my propriety indicators and the short-term momentum oscillators, they are indicating that stock prices in general have risen to overbought levels and are now ready to turn lower once again!

The NASDOG performed very well Friday as it gained 23.50 points to close out the secession at 2,413.36 just 8-9 trading days since the index was hammered down on massive selling volume on 1-23-2008 at 2,202.54 the index has been on a massive tear mostly due to a wave of short covering�.the index started the week out at 2,326.20 and posted gains of 77.16 as waves of short covering pushed the markets higher, they were also broadly stimulated by a host of various rumors�.the most prevalent was that ABK/MBI and other bond insurers would be bailed out after taking on so much leverage, on very-bad-plays. The bulls better hit their knees and pray that the PPT team and the stock market fairy godmother continues to juice the markets with huge streams of liquidity in the attempt to rescue the indexes as they have done as the fed-head rate cut of 75-basis then another 50-basis points has done very-little to inspire investors into real buying, it appears to me to be more short covering than anything else by bear-cub-shorts that fail to utilize good money management and protective stops. The PPT has managed to induce an orchestrated short squeeze after the FOMC rate decision and pitiful jobs numbers as they caught everyone leaning to the wrong side of the boat! The Nasdog Hourly is ugly and after this relief rally this past week we are nearing very-overbought conditions; as you can see from the details on the hourly chart. The Nasdog Daily Chart is entering the neutral zone on the back of a deeply-oversold selling-spree, after an induced short squeeze, we will now soon if this rally has legs or not! Nasdog Weekly Chart appears to be indicating a bottoming process could be forming, but to be conclusive we should see a retest of the relative lows�but time will tell if this indeed occurs in the near-term basis. According to the Nasdog Monthly Chart it depicts a potential break-down below the long-term rising wedge...and if this break happens look out below. The Nasdog has near-tern overhead resistance at 2,437-2,442, thereafter at 2,480-2,490; if the bulls fail to keep the tonality alive then the bears will return and look to retake the 2,348-2,356 zone thereafter the 2,300-2,308 zone!

Russell-2000 Was the strongest of the majors today as it posted stellar gains of 17.20 points to close out the secession at 730.50 the index had regained a lot-of the recent ground that it has lost (41.90 points this week alone or 6.08%) thanks to the unprecedented mega FOMC rate cut of 125-basis points in just 8-days, this spurred a huge mount of short covering especially in the banks and homebuilders�.since the index�s drop through the 7/6/2006 lows at 668 and subsequent drop through right down to the 650-653 level, a level of support I had previously mentioned would hold on the first test, we have since rallied up a whopping 80 points or 11%, I believe a retest of at least the 665-670 level is in order to form a concrete bottom, at a minimum�.and if it fails to hold, then we will retest the 650 lows and the bulls better pray that these levels hold if we do get a retest�.On a near-term basis the near-term charts are very-overbought (30/60/120/180); the (Russell Daily Chart) looks plainly a tad bit ugly With multiple mixed divergences cropping up; however it appears that we could continue this rally upward to the 750-755 OHR levels (somewhat unlikely but possible) where as the Russell Weekly Chart is depicting a possible bottom has been posted, due to the short-covering blitz and we could rally up into and through options expiration week�.meanwhile the (Russell Monthly Chart) is also flashing mixed signals as we broke down through the rising wedge channel, but after Thursday/Friday�s moves the bulls have managed to press back up into the rising wedge formation� as word of the largest tech acquisition in history hit the wires (Microsoft Makes $42-billion dollar bid for Yahoo) and a better than expected manufacturing report helped sentiment throughout the day as dip-buyers and speculators rushed in�.. Airlines were also strong as they posted strong gain of 5.0%. The sector is benefiting from continued talk of consolidation within the industry and a 3.0% slide in crude oil prices. The Russell-2000 has strong overhead resistance looming just overhead at 740-743 thereafter overhead resistance emerges at 759-754 if the bad-news bears return look for a retest of 710-713 thereafter 688-692.

The Dow was bolstered by speculation that MBI/ABK�s issues will be positively and very quickly resolved! And the positive bias of the Fed-head rate cuts and massive amounts of liquidity that the fed-heads have been pumping in at a break neck pace�the index posted a bullish day as it gained 92.83 points on the session to close out the trading day and week at 12,743.19 the Dow rallied hard this week, as it posed stellar gains of 536+/- on the week�.the Dow rallied back to the daily 34ema and is within striking distance of the down-trending 50ema/sma 12,880/12,972 respectively and these MA�s should prove to be obstacles to overcome�.the 30/60/120/180 charts are very-bought and we could experience a slight leg upward before we see a resumption of this yearly down-trend The 60-minute chart�is in my opinion just about done with this short-covering relief rally�and its very close to complete this cycle�.I still believe to successfully even think that a bottom is in we have to retest the 12,000 area again of the reactionary lows�.the bulls are within striking distance of the 12,990 - 13,000 psychological level, if the bulls get real giddy they could attempt to run to the 13175-13210 level, and they will run into a brick wall there�the Daily Chart...is somewhat bullish and it still quickly approaching over-bought conditions, we could be hours/days away from another down leg. The weekly chart is still demonstrating multiple divergences Dow Weekly Chart�though on a bullish note the weekly chart has rallied back up into the megaphone pattern����.the Dow Monthly Chart indicates that we have experiences a break down out of the rising wedge, and that we could continue down for 2-6+-weeks or longer before staging a real bottom but that is a long ways off, and the indexes do not rise or fall in straight lines!

The SPX was also a stellar performer on Friday as it managed to close up 16.87 points to close out the trading day at 1395.42 and it just as the other major indexes has benefited from a massive panic rate cut of 125-basis points from the fed-heads in just 8-days�. as it was propelled higher due sector short-covering in retail, transports and homebuilders etc. the index posted back-to-back week gains, this week it gained 64.81 points, and together these past two weeks the index has gained back a substantial amount of its recent losses�.it is still down on the year (started the year at 1,468.36) by 73+/- points but we are well of the intraday/month lows of 1,270 the index looks poised to retest the psychological critical level ( 1400), but will likely test it on Monday and I believe we could easily see another blow-off leg-up higher�.the SPX Hourly Chart had last week confirmed the head shoulder pattern break-down and thanks to a massive amount of shorts that were caught up in a perfect squeeze�.due to deeply oversold conditions now we have reversed from deep oversold conditions to very-overbought conditions....the SPX Daily Chart as I stated last week the daily chart looked poised for a potential relief rally, from very over-sold conditions and that is exactly what we have seen this past week now we are passing through the neutral zone on our way back (possibly) to test the 1,404-1,408 level of overhead resistance and if the bulls are successful in punching through this zone then they will surely set their sights on the 1,424-1,428 zone thereafter��.the SPX Weekly chart is indicating still oversold conditions as well and I still believe that we could see another push higher heading into options expiration pre unwinding period! SPX-Monthly Chart still looks very venerable to some significant downside.

Have all the fears about the global economy, as US lead recession disappeared? So far we have seen that the malaise has wiped billions of dollars off European stock-indexes, as investors remained unconvinced that Bush's rescue package was sufficient to avert a recession, of the panicking fed-heads massive rate cuts.

� On Friday the Nikkei 225 sold-off 95.31 points to close out the trading secession at 13,407.16 the index started the year at 15,308, and has since dropped 1,900+/- points since the start of 2007 or 12.50% in just about a month a staggering reversal in sentiment and tonality the index lost 132.00 points on the week

� On Friday the Hang Seng rallied up a whopping 593.87 points or 3.39% to close out the day at 24,123.58 the index started the year at 27,812, and has since dropped 3,589+/- points since the start of 2007 or 13.50% in just about a month a staggering reversal in sentiment and tonality the index lost 998.79 points on the week

� On Friday the shanghai Composite dropped 62.63 points or 1.40% percent to 4,320.77 the index started the year at 5,261.56, and has since dropped 941+/- points since the start of 2007 or 18.0% in just 23-trading days a staggering reversal in sentiment and tonality�. The index lost 440.92 points on the week

� On Friday the France's cAC-40 rallied up after the open, it closed green for a gain of 108.27 to close the day out at 4,978.06 the index started the year at 5,614.08, and has since dropped 626+/- points since the start of 2007 or 11.2% in just about a month�s worth of trading a staggering reversal in sentiment and tonality��the Index gained 99.94 points for the week�..

� On Friday the Germany's blue-chip dAX 30 gained 116.92 points as massive short squeeze lifted it up, it closed the day out at 6,968.67the index started the year at 8,067.32, and has since dropped 1,099+/- points since the start of 2007 or 13.60% in just about a month�s worth of trading a staggering reversal in sentiment and tonality��the Index gained 151.93 points for the week�..

� On Friday the Euro�s blue-chip fTSE 100 gained 149.40 points as massive short squeeze lifted it up, it closed the day out at 6,029.02 the index started the year at 6,456.90, and has since dropped 427.70+/- points since the start of 2007 or 6.60% in just about a month�s worth of trading this index has held up the best in the far away lands�the Index gained 160.02 points for the week�..

As I wrote last week and it still holds true....the most noticeable negative technical indicator that I have seen lately is that since we triggered the August intermediate bottom, each subsequent time the indexes slipped below their respective 200sma the drops have been significantly steeper and on greater volume; this is distinctively bearish. From my experience we need to be very patient and wait for some congruent indicators to display conditions that this corrective move, is just that or that we have now entered a full blown �Bear-Market� I want to caution you to be very patient when taking on longer-term positions and that you do not blindly believe here is not to make a snap decision on the buy side and/or sell-side at these levels in this whipsawing environment unless we see clear signs on a technical basis of a reversal and or trend continuation. Undisciplined investors historically jump into a stock or short a stock/sector after listening to a plethora of talking-buttheads as they start to spin a story as most of the hype and information in the business media is usually manufactured by analysts and company officials who have an agenda that suits their best interests, (key-word=their) not your interest at all, they are trying to lure you into the fray with hopes of grandeur�.so please be very careful.

© 2008 Stephen Tetreault
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Stephen Tetreault
T-Waves
Southern Maine, USA
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