The IKE, LEH, & AIG crash........

Welcome to reality...........I wanted to post charts of the culprits at hand on Friday's close so a before and after picture can be readily seen after the demise is complete.





The real key will definitely be the VIX.....How high will it go. Watch the fib lines for resistance.


Good luck and have a great week... Oh yeah, perhaps some theme music is fitting for the open....

Wally World

The last time WMT was at this level was late 1999-early 2000. Hmmm didn't the market nose dive after that?

GLD, EUR/USD, & THE S&P

How low will Gold go?
As the commodoties trade unwinds will a precious metals bottom signify the time to get back in on the long side?

Here's a thought...Where are all the profits from the Energy and commodities run-up going?















Equities? No they're down too....

Maybe the Dollar....It will be interesting to see if the EUR/USD finds support at the next FIB line.

Bull follow thru - Hah

The VIX broke through to the upside and the next stop could be above $30.The S&P took out all of yesterday's gains and breeched the bottom of the fib line. The July lows are next...

















AAPL has hit the bottom of its year long range again, but is looking weaker here. The failed inverse H&S of last month propagted this downward move. Look for a bounce off of this resistance line and then the getting short should yield some nice profits.

Today means NOTHING......

It is pretty interesting that a 300 point move in the DOW means very little. All that Paulson and the bailout boys have done is manufacture a move back into the range-bound areas of last week. The catch is that one would expect the BULLS would have blown through the upper boundaries for a 500 point move and at least gotten above 50-week EMAs with ease. NOPE. Now take a look at the VIX...finding support above its EMA's...

What worked:

Consumer staples were on fire...a lot of new highs made. Checkout CHD, PG, GIS, HNZ.

CALM has retraced and may be worth picking up some calls on here.



















What did not:
Technology got taken out to the woodshed....
AAPL, RIMM, GOOG, etc

Why:
Bottom-line is the BULLS have to have follow-through tomorrow and same store sales at 7:45 am prior to the open, Pending Home sales at 10am will slow the upward momentum.

Bull (T)rap -

OPENING JUMP FOR EUROPE STOCKS ON FANNIE, FREDDIE SEIZURE; UBS LEAPS 8%
Call it a melt upGlobal stocks, U.S. futures surge on Fannie Mae, Freddie Mac seizure

Global rally on back of plan to rescue beleaguered mortgage giants. • U.S. stock futures leap Gold, oil rise

BAILOUT U.S. seizes Freddie, Fannie Treasury Secretary Henry Paulson (left) and Federal Housing Finance Agency Director James Lockhart announce the FHFA will take control of mortgage giants Fannie Mae and Freddie Mac. Bernanke says move will strengthen housing market.• FDIC to help small banks with exposure to Freddie, Fannie• Reserve debt, reserve judgment? (First Take) Likely fall for Fannie, Freddie

Bottom-line here folks: the people just got screwed, the banks just received an executioner's stay and are still on death row, and you have just witnessed the biggest fleecing of America since the purchase of a $600 toilet seat. Oh the simalarities........

Be VERY careful going long here. Take profits quickly. The SPY chart shows the levels that will be tested.

This rally may be the bulls last stand and plainly conveys the DIRE situation in housing and the continued rise of foreclosures. When the VIX bottoms out the Bulls are DONE....

The VIX will define the direction..

Which will it be?

Market Bears: the VIX made a higher low and is merely pausing to break out of the current range?

Market Bulls: The sell off today capitulated at almost the exact level of a previous turn and is now at the right shoulder top of a H&S pattern and will thus test the bottom of the current range.

6.1 % unemployment and Consumer out of cash.....

The unemployment news speaks for itself.

Check out the true measure of the global consumer...Mastercard and Visa. Do not get hung-up on the fact that these guys are Credit card companies. They derive their business solely from the number of TRANSACTIONS made where a credit or debit card is swiped. It's pretty simple: No swipes = No Sales.














So where is the money going? How about indulgence items like tobacco, spirits, and can you say sex.....Yep when people are couped up inside what else is there to do.....So lets take a look at the Best in brand condom manufacturer...CHD. They deliver the goods of the powerful brand name condom "Trojan" as well as other consumer staple goods. I believe the charts speak for themselves....it's almost as if they've been taking Viagra....up, up, up some more......

OUCH! if you were long......

Today was a Bear's dream as everything pretty much sold off. You could pick any sector to look at as the oil/commodoties/equities trades continue to unwind. In short the global growth theory is no more or at least on an extended pause.

The Technology sector shows what can happen when patterns fail. The QQQQ, AAPL, CSCO, GOOG, & MSFT exemplify how the Bulls are facing an uphill battle of resistance.

Let's be real clear: there will be bounces along the way down to test the July lows, but those levels will be tested eventually.

AAPL is set to announce something on September 9 and here a a couple links to what it could be:
http://www.appleinsider.com/articles/08/09/04/apple_looks_to_take_multi_touch_beyond_the_touch_screen.html

http://www.ilounge.com/index.php/news/comments/ipod-nano-4g-touch-2g-dimensions-revealed/

GLW, BBY, & RTH.....cause and effect?

Corning (GLW) pre-released a lower forecast sititng "slow" sales of their LCD glass products.

Hmmmm, I wonder who one of their major customers would be? Circuit City you say, yeah right are they still in business?

So let's take a look at Best Buy... Why has BBY not taken a hit if sales of LCD products is "slow"? Anyway the chart is shaping up for a nice short with a close stop.....

Part of the due diligence here is to checkout the RTH. The retailers have bounced a long way in a hurry on a consumer that is still running out of money and finds credit getting harder to obtain. The long term chart shows a green line of resistance and breaking down to a 6 month chart you can see an inverse H&S pattern. A failed breakout of this pattern could be the downward catalyst of this group.

IWM - Failing cup with handle - again?

The Russell 2000 is showing a similar pattern to July-October 2007. The failed cup w/handle of 2007 prefaced a serious downturn. Could this be the begining of the next leg lower?

If it fails now - a corresponding 2007 move would project the
IWM to approximately $58.

The S&P 500 20 day - 30 min chart is pretty telling of Tuesday's activity. A broken trendline and fibonacci line which should have been support is
now resistance.

Add the failing of the QQQQ's inverse
H&S pattern sums up to be:
VERY BEARISH....
Oh yeah I almost forgot the most complelling of all....The VIX broke its trendline. All you have to do is look at what happened the last time a VIX downtrend was broken in late May.

Could we reasonably expect to see a couple of more market down days this week? And then a retest of this VIX trendline or market up for a few days, perhaps early next week...


And then the BEAR market continues.

Deee-fense wins championships.........

Defense stocks are poised for action as Russia pushes their chips in on NATO's table. Here is the Aerospace and Defense protfolio ETF touting a bullish ascending wedge. The cool thing about this is the tight stop that can be set just below the Fib line.

General Dynamics seriving the coffe at the table in this cup an handle formation. Again a fairly tight stop at the Fib line.

Raytheon....well enough said....

If you have not seen the Wallstrip video blog on GD it is worth a look.

SPY descending wedge and a semi comparison

The SPY is hitting some technically indecisive levels. The bearish descending wedge was broken this week and retested Friday. Is it coincidence that the level is below the mid-point of this short-term range and corresponds to a previous lower low?

Semi-conductors are looking interesting. Here is a comparison of the big hitters INTC, AMD, NEC, AKAM with the overall group SMH thrown in for good measure. AMD may be oversold in this group and ripe for some longer calls. There is definitely a distinct difference between AKAM & AMD over the last 3-5 years. But there is no doubt that these two will out perform INTC.

VIX

Not meuch going on with the persisting low volume going into the long holiday weekend. The VIX is setting up to let traders know the direction going forward. I find today's VIX action to be ineresting as the market was up big and should have pushed the VIX below the recent lows. HMMMM....I wonder why it did not?

Financials, Consumers, and the SPY...

As Wall Street and Europe finsh off there end of summer vacations the market is meandering around range bound.

Check out the lack of volume on the S&P....
Volume up on the way down....
Volume down on the way up...... Either way could be played here with fairly tight stops.....I guess this is why they call it a "Trader's market".

Existing home sales Data

Total existing home sales increase to 5 million homes. However inventory also increased to an 11.2 month supply.