We Are At a Market Crossroads

As we are at a market crossroads, and a healthy consolidation began yesterday, it is interesting to look at our longer term (two weeks) projections for the market.

Gas fell yesterday. Will it for the long term?

Hmm, when gas hits $8.00 a cross country flight will be $1000.00, airports and resorts will close, and the state of our manufacturing industry will be in shambles. Author Chris Stein even believes that Walmart, which has 6000 suppliers, 80% of which are in China, will be killed by the cost of global transport. Oil will be our passport to a shrinking global economy.

Could this be a country headed to nuclear reactors powering everything, with high speed rails connecting cities, highways changed or closed.

I believe, much like the article by Baker, that President Obama truly sees the disparity of our situation. Unlike Republicans, who have no answers, only rhetoric (with no leader) I am concerned about how our country is led in direction, but surprisingly not by what Obama is doing, by what he is not doing.

We were closer to the edge of financial meltdown that most of us "simple citizens" will ever know. Obama does see the overall big picture that there is NO WAY it can continue the way it has continued, without world ruin. But as always, rather than fully introducing his radical changes (not socialist, not Marxist, but radical), Obama is choosing to play middle grounds, and try to work with all.

There is too much greed within our system, our corporations, and our government for "trying to work with all" to work.
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The politics talk above lead to the crux of the discussion for our traders this week: Secular or Cyclical Bull Market?

We know the drill. Bulls believe we are entering the beginning a true bull market, and the economy is righting itself, with the market historically leading.

Right now we've all experienced massive stock losses, so the bull run we're in often doesn't feel like it. But just watch the reality:

The Dow fell 33.8% in 2008, and last week finished 34% above its 12 year closing low on March 9th. The S &P 500 is up nearly 40% from its low on that date. The traditional definition of a bull market is a 20% gain from a low point and a bear market conversely a 20% decline from a high.

The facts: The Dow remains 38% below its record close in October 2007, and the S & P is nearly 40% below its record.

The new facts will be if consumer spending is strained, or continues ( I see tightening of belts everywhere, how about you?) upward. And our smaller manufacturing economy has lots of excess capacity.

There will need to be a lot of money spent that will get people spending, the key to how our game works.

We'll share more this week on secular vs. cyclical markets, studies done by Ned Davis Research, and a bit of perhaps what could happen.

In the meantime, we made a bunch of money on our puts yesterday as the market finally broke and was at our 8550 support line by 3 p.m., with a 210 point drop.

We re-calculated the Dow at 9.45 a.m. and 1.30 p.m. yesterday, and it was very helpful for us to see where s3 became the new s1, and 8550 held for several hours as a bottom.

Our June 445 P (OXBRI) was profitable on it's last day before stop loss.

We'll lead with dual signals, as the market may have bottomed. The bear/bull struggle is far from over.