Help Me Out Here Floyd!

Trader BD said it best to me yesterday:

"I don't get it. Oil goes up and stocks follow? The cost of US debt is going up and stocks go up? The largest car manufacturer goes bankrupt and stocks go up?
WTF!!
Help me out here Floyd. Am I wrong in my thinking that when the cost of goods goes up, oil, that's a good thing for consumers that do not have the same access to credit that they did a year ago, if they even have a job.
This is Fu000 Up!!"

Trader BD said it well. As GM bankrupts and our debt soars the bulls run the market right to our Dow tops. Truly no chartist could begin to predict what in the human emotion has taken over to bring this much optimism to a market.

Fundamentals are out the window. The market goes up, and Gold hits all time highs. The market goes up and oil is soaring By 1.30 p.m. the S&P 500 had moved above its 200 day moving average.

So a lesson:

“If there is one lesson we have learned from the last four months of 2008 it is that the world financial markets are more highly correlated than anyone could have imagined.
The ability to hide behind any model that used a Gaussian copula function was deemed unwise as securities with previously slight or even negative correlations moved in tandem. Whether personal or financial, relationships tend to break down under duress.
Fall 2008 was the stress test for the global financial architecture, and that structure almost failed. Even though finance is based on mathematics it became very clear that human emotion had a vital part in deciding asset values”
~Andrew Busch

For the market to shift bias we need a 250 point or greater downturn in a day that holds; after this occurs the average downturn in the last 40 cycles has been 564 points from the highest high down. This would put the market back at the 8236 ground, and would be healthy in consolidation, and what many of us see as overdue. However, there is greater risk for even greater downturn as the market reaches an extreme count.

Bulls may have the strength and momentum to take the market to 8950, adjusting these ratios.

Call traders willing to buy above prior day close were the only signal traders out for yesterday, as we own a put, and have made second buys and are in the waiting game. This is where it's important to recognize that our alert shows SEVERAL different ways to enter a trade, and you should read the instructions carefully. OXBFI June 445 C, for example, was not available for those of us willing to only pay prior day close or below, but WAS available for many happy traders with OEX that paid 3.50 to 3.90 for opening entry, and sold to highs of over 6.00.

It's not often we're early on a signal. We saw calls as overbought and own a put losing value. Let's hold it as a hedge, and just watch this market. It's too erratic to be healthy and that is always to the advantage of the option trader.
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Bloomberg has many articles on U.S. Debt, and a world currency, and the value of Treasuries. All is NOT as it appears, and our "watching" the market while we trade is key.

Many chartists, in addition to the Point and Figure supply and demand chartist Floyd, see a contracting triangle. Volume often begins to decrease, and "flat lining" occurring in the "trade range building" last week.
Usually in a contracting triangle when the pressure builds there is sudden movement, and it's equal to the largest up or down moves that occur.
Bottom Line: we could have a great deal of volatility this month, good for us, if we can read it right:)