A Pent Up Consolidation Continued to Erupt

Friday showed how VIX, and the complacency the market had felt, was far from true; instead, a pent up consolidation continued to erupt.

The market hit theoretical Dow lows Friday of 9797, only to close at 10,012, or 10,042 on the theoretical. For months Floyd has provided projections, and discussed what is called a Fibonnacci retracement. This ancient mathematician used his numerology analysis to predict that from the "lowest low" of something it will rise 38 and then 63%. The market did just that and we predicted hesitancy and confusion at 10,746. We've been doing so for months. As the market reached this, and a slight step above it, we began to see the faltering. Fibonnaci and chartists typically see a 10 to 20% pullback from the new 63% highest high. This would put the Dow at 9671. Friday we came very close to this bottom before ending the day above the, psychologically important, 10,000 mark.
Pay very careful attention to our new Dow projections. Many of our traders have made great bucks this last week just following support/resistance lines and our Dow projections.

So, what's next? Was this a good and healthy consolidation from a market that moved up too quickly, or is this the U.S. economy being noted globally for not having the resiliency or strength, and that our debt will overtake us?

Being one what trusts and believes almost nothing, I make note that the arctic ice melt is to cost 2.4 trillion. Of course many with IQ'x of 40 or more actually believe there is no global warming.

These were the folks that voted for Bush the second time :)

If the arctic ice melt can cost 2.4 trillion, where does this come from. If the Euro is now losing value, the USD gaining value, and Gold and Oil losing value, what do you make of it?

I know oil will run from 60.00 to 100.00 a barrel, and run in cycles.
I know the USD is really worthless shit, completely made up of debt and promises
I know that the Euro will not make it over the long run, and discussions of world currency will circulate again..

I know these things as opinions, of course, that you are paying for as you project the market short term. So, here is what I know about a 10 vs. a 20% correction. If the market continues to correct, and passes below 9500 we suggest that the country will be ripe for another, even larger stimulus plan, increasing our debt further, and that Congress will pass it. This will occur as we hit 20% lows.

If the market holds near where we bottomed on Friday and holds steady, or shows slight increases, then 2010 will continue in the same slight whipsaw, light increase, decrease, and a lucky year end of 2-5% above prior year, if we're lucky.

It's a trying time. We will lead with a call, on the optimistic side that we may now trigger a short term upside, but pay attention to futures carefully. We think the Friday upside reversal may give way to an oversold bounce.

However, if one reviews the NYSE Bullish Percent Index it's easy to see how my comments above show a turbulent year and no quick recoveries.