Yep, congrats, Prez,  you and Washington did it again!.   We could make this such a Political Journal, but we try to keep this PG13 rated.   Just in the past week, we’ve been irritated…“..Washington sticking their paws on the banks once again, saying hey pals we want more!…“..The question … is 'BROWN really GREEN' for traders/ investors and give this market direction as Washington’s messing into the markets, notably into financials, get a wake up call".   Unfortunately,  Obama got on the wrong side of the bed and gave Wall Street a rude wake up call.   Actually, it was more of a crank call as the collateral damage filters beyond into Main street, a street that encompasses investors that were looking for more stability instead of uncertainty that this is bringing with it.   How many actually know what ‘prop’ trading is outside of the trading world or think it had anything to do with the crisis?..Let’s just stop here, before this does become a Poli’ Journal.

“..The market needs a ‘BIG’ catalyst in the short term and we have no idea what this possibly could be on the positive side to go higher.  The odds are always better for a surprise ‘BIG’ negative, so we must simply ‘trade’ the upcoming individual earning surprises or sectors that get momentum…”

Well.  Now that we got the ‘BIG” negative odds, what next?   It always seems the case that when the market is treading water at an important technical level something occurs to cause a breakdown…”(this will likely change if 1130 levels go, which would mean an imminent quick drop)”.  Once 1129-1130 was penetrated a domino trip to 1115 ensued.  The reason this support held and buy dippers came out at least 3 times before was it was never touched on news such as this, buy dippers don’t come in on such events.  We’ve covered many times before here at DJIM that things need to settle down and stabilize before aggressive buyers come back.  It will take longer this time around.  In years past,  we’ve highlighted that the big shots either in Washington or corporations wait for XMAS, New Years to pass before dropping bombs.  This year is no different we just experienced.

Unfortunately, even though 1115 is next support/ 50ma , it‘s the starting point for year.  Dip buyers that come in will not be able to push this back close to recent highs.  We now can only hope for a trip back to ~1130 before encountering  ‘happy’ shorts.   Today has given them hope and confidence to finally press’ on some positions,  something we haven’t had to deal with in a long time.   Also, instead of demand buyers showing up , many investors in the market will want to use any bounce to replenish profits lost this week.  The psyche has changed for both sides!.  

Until this news fades, we can only approach the market the same way as most recently into earnings.  Even though it is pretty much a "sell the ‘earning’ news” season,  it doesn’t really affect what we trade into earnings, but the broad market.   Surprises will continue to come from the smaller likes such as CREE & PLXS  yesterday in Journal that was able to gap and still rise ~3 pts.    The good news is not priced in what we follow.    These earning plays may only be only 1 day trades to begin with at this point, but when things stabilize in weeks to come they will be once again be worthy stocks when ‘earnings’ will matter,  just as jobs and everything else that is more important than today’s ill- timed announcement with no specifics (fact sheet) that not only caught Wall street, us, off guard, but,  other politicians and regulators around the world.   No co-ordination at all!.   A sneaky ‘Drive -by’ accompanied with language, “ If these folks want a fight, it's a fight I'm ready to have”,  best suited for the streets.