The Economy Can be Jump-started

We saw the first upside yesterday in a long long time. As the market hit resistance lines there was hesitancy, but we did close over Floydian levels of 100 points up, a key to what could be the first upside.

My rule of thumb: the market must close 100 points or more UP to even consider any shift in sentiment. Wall Street finally did it yesterday, with 220 point moves by 3.30 p.m., before the market struggled at the 6950 resistance line, and faltered.

Today is the test, as the market must maintain upside to step in to its own exhaustive gap up (bear market rally) or a true bull rally. As the market hit the 3.00 hour yesterday we saw 215 point plus moves, a very positive sign for any type of rally, and right to our first Dow projections. We'll list a new call today, on the "count" of a shift in bell curve analysis, but noting to all traders that this is such a volatile market that any move can be undone in minutes.

These are extraordinary times. Traders write me daily with "what is happening, what will happen, why is this happening" and increasing concern about the news of nationalization and socialism.

At times I must smile.

"This crisis is neither the result of a normal turn of the business cycle nor an accident of history. We arrived at this point as a result of an era of profound irresponsibility that engulfed both private and public institutions from some of our largest companies' executive suites to the seats of of power of Washington D.C."-President Barack Obama

This man is our visionary. He gets it. If we truly can allow him to build a union of people, we can change our country. If we do not, and allow the bi-partisan politics to continue.....it does not look good.

For 8 years we allowed Bush to lead by fear, and false facts. I simply can't follow why an alternative approach can't be welcomed. Obviously what we have done has not worked. When I hear Rush Limbaugh lead the Republican Party I'm saddened even more. A buffoon sitting in Palm Beach looking for the President to fail. How very sad. Read this:

http://www.msnbc.msn.com/id/29502272/

The strategic value to the economists is how we must analyze this market. These are the issues and "facts" they work from:

1. The economy can be jumpstarted. No one knows if any stimulus package will truly do this.

2. We are in a deflation. This is clear cut to Floydian logic, and the deflationary cycle must complete itself, despite our intervention.

3. The housing market will bottom out and recover. Will it? When?

4. A depression is a real possibility. During the great depression the Gross National Product fell 46% in four years.

5. U.S. Sovereign Risk is zero. What happens if the USD loses it status as the most credit worthy asset in the world? The idea that the U.S. could fail would be ridiculous just a few years ago, but fear that the United States could fail to repay its debts does not seem so crazy today.