Thumped Thursday - RECESSION! - MarketTicker Forums

Posted 2008-01-17 10:06
by Karl Denninger

Yowza.

Philly Fed Index is -20.9. Employment index down, new orders in the ditch. Absolutely nothing good here - near term indicators are horrifyingly bad, and the prices paid index is up.

The market? It tanks. Immediately, strongly, with conviction. Bernanke said a nasty word today on The Hill - the "D" word. No, not depression - he actually used the deflation word.

You know, the word that all the inflationistas say is "impossible" with "Helicopter Ben"?

Yeah ok. You keep buying that shiney yellow stuff and let us know how it works out in a month or a year, ok?

Me thinks that Ben knows he can't stop this, or even do anything material to help!

But now, instead of a "we're going to CRAAAASSSSSHHHHH" call this evening, you're going to hear the contrary side of me.

I think we're going to bounce.

Right here, right now.

Why?

Among other things, all my indicators are on "tilt" oversold.

For another, I can cleanly count a nice 5 wave down move that should have finished today, if I'm reading it right, and we went out very close to the lows of the day, which is a nasty setup to suck in the Bears, get them to short the market into the close - and then kill them! (Remember, bear markets are not "nice" to either Bears OR Bulls!)

Third, IBM just got a very nice pop in the aftermarket. Apparently the street likes their numbers.

But after that bounce, which I believe lasts a week or two?

We blow chunks all the way down to 1220 on the SPX.

If you're still long the market after all this punishment, that bounce - assuming we get it - is your opportunity to "depart peacefully" from the market for a while.

Oh, there is no guarantee on this - just in case you're inclined to ask for one.

Why?

The VIX. It broke a five month triangle today - a very reliable pattern - which targets approximately forty.

That augers for a severe cratering - perhaps immediately.

Tomorrow is OpEx, and I expect fireworks. Stay tuned!

Here's the technical!

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