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Nothing has changed yet. I’m not trying to rationalize my position, but go ahead and short if you want.

On the 20th anniversary of the 1987 crash “the market” tanks 2.6% The RUT was the worst with 3.18%. In 1987 they dropped 25%. Today is nothing. Don’t get excited thinking that the we are in a bottomless pit.

Big money needs to make their year end and they are going to do it. This will be a buying opportunity.

If we sell off into the Fed meeting, the Fed will save the market and we rally into the end of the year and little beyond that. Moreover, a selloff into the Fed meeting on the 31st of October will likely cause a double bottom and retest of the 200dma. Look for that test of the 200dma to happen only if we break the lows made today.

The Dow

As of now I don’t think that happens. We have retraced to important short term levels and I’m expecting a bounce. We need to see what the tech earnings are next week from Apple who reports on Monday btw. Microsoft has been a terrible investment for the last 7 years, but they report this week and I want to see good things from them. The XBOX has turned into a money maker, HALO was a huge winner, Vista is being put on computers now (and we already know PC demand is big from INTC numbers), that also means more Office sales as well, plus CAPEX spending is trending up. There are great tailwinds for Microsoft to start performing and the chart shows it. I have some free cash and will likely buy some MSFT pre-earnings and just hang on.

The COMPX continues to show the most relative strength. I talked about it earlier today with the different moving average support levels.

The COMPX

The SPX is almost at its 38% retracement and I don’t know if its going to go much further. So if the SPX doesn’t drop that much more and the Nasdaq only gets to its 38% ret (which is 43 points away), the Dow will likely not retest the lows made in August.

The SPX

The average investor is going to spit up their coffee when they read their Sunday Edition of the New York Times, or Wall Street Journal or local paper when they eat their breakfast tomorrow. However, technically nothing has changed yet. For now its oversold on the downside. I went long the NDX at the close today.

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