8 AUG 2010, Sunday

• From Terry Laundry (http://www.ttheory.com/) who's been at this for 40 years...here's an interesting recording from his 1 AUG post in which he talks about how "Da Boyz" may be trapped by their own game....http://ttheory.typepad.com/files/tto20100801audio-b.mp3.  Perhaps this explains the recent wild gyrations and maybe the "Flash Crash" showed the first cracks?    
• Basically, they ferociously bought up stocks using the free money they got from the Fed / TARP and are now trying to unload their inventory to the public.  Only, this time the public doesn't believe the "all's well" calls from Wall Street and they're not willing or unable to take the bait.
• Sooo..."Step right up, my friends, and buy your tickets to the greatest show on earth....The Circus of Disbelief."
• Be careful out there...fundamentals are faltering, stimulus has reached the end of its useful impact, the Baby Boomers are hunkering down not spending and trying to ensure retirement, employment isn't improving (thus, housing and auto sales probably won't either which would lead to the improvement in employment)...it's a very sketchy environment like none we've lived through before.  
• Long term investors must ask themselves whether to stick, lighten up, or run and just wait for the next down cycle to play out.  It's a personal choice.  Traders will trade...and we'll change our minds swiftly, as necessary, in order to follow the price action.
• So, here's a pro/con for both sides.  SP500 chart above (http://thechartpatterntrader.com/)...in the bottom right hand corner is a pattern that the bulls are hoping plays out...an inverted head and shoulders pattern that projects to 1250.  Now, step back and look for the big black LS, H, RS...this is potentially a very big head and shoulders top which the bears are aware of and projects down to the low 800's.  Can "Da Boyz" pump this up to another new high?  I dunno...how much firepower do they have left?
• Market has been improving (above 50MA)...but still neutral below the 90MA.  Daily is getting overbought while weekly is stuck in the middle.  Sentiment is not at extremes so offering few clues.  So, it's clear as mud..."You make the call".