Ok, out of the gate...... retail information coming in mixed - Dillards not good at all, Big Lots stronger. Indications? Tough to read - a specific-store story? Maybe. Tough to know for sure. But - if this becomes a trend, and I suspect it will, it will start slowly and get nasty from there (bye-bye Chuckie, your credit cards are blackened eh?)

Mortgage volume declined (again) by 4% in the last week. More importantly in this data is that ARM mortgages are down huge - 50% less in terms of percentage - over the last year.

Cheyne (a commercial-paper house) is in deep trouble and is apparently liquidating assets. This is - at this point - orderly. Will it stay that way? No way to know, but I wouldn't bet on it. These sorts of stories keep coming, along with more mortgage lenders either curtailing operations or imploding outright.

The true big story inside this one is here:

"S&P lowered the credit rating on the commercial paper issued by Cheyne Finance by two levels to A-2 from the highest level of A-1+. The rating on senior debt was cut six levels to A- from AAA."

That's not supposed to happen.

These assclowns in the ratings agencies better step up and start dropping ratings sooner. Six-grade downgrades are supposed to be impossible - one of those "six sigma events" that, barring an asteroid impact, are not supposed to be able to happen.

While this is not the sort of catastrophe that a cut from AAA to junk would be in one swoop, its close, and if these clowns don't cut this **** out nobody will use these ratings for anything other than toilet paper in the very near future.

The pump monkeys are still trying to find some way to castigate the Fed for the credit market mess. How about trying something new - like, for instance, not screwing people by backing your so-called "safe" debt instruments with worthless swaps written OTC? How about all derivatives and structured finance vehicles being sold via exchanges, so we have price transparency and the ability to perform surveillance on margin requirements?

Naw, we can't have that, can we? That would stop the bull**** and force people to have adequate reserves!

The interesting thing in all of this - so far - is that we haven't heard the hedge fund explosions. You know they're out there. I know they're out there. But boy, are they being kept quiet. I wonder how long that can hold? Maybe until the Hedgies have to own up to the explosion in their client base, which could be as late as the end of next month.

Today's price action was pretty strong, with clear (successful) attempts to spike the futures. Organic my ass. With the thin volume it held too, and was repeated once they got their teeth into it. I was quite surprised that things held on the top end, to be honest.

This was largely program-trading driven today with a belief that if the market could be shoved back over the 200 it would hold. I warned that this might happen last night, and it appears it has. For how long? I doubt for long at all - but for today this is what you had happen, and it is absolutely essential to respect the tape!

When we got our dip today I set trailers on all my shorts, only to watch them get popped one after another, then run hard to the upside. 'Tis ok - while I think we're going to roll over here soon and head south, I'm happy to re-enter shorts from a higher price and for now, take the money twice. If I miss the roll and don't get back in right at the top, its ok.

We sit here with the 200 pierced to the upside (again) on the S&P, and a potential head and shoulders forming. Play smart kids - while I expect we're going back down, I could be wrong on this!

Here's some TA for you.... in video format



See 'ya in the morning!