Well, maybe.

We started with a nice gap down, putting into practice that our downward trendline appears to be once again in play.

Financials got pounded today. Broker downgrades didn't help before the bell, but the general action was weak to start with, and this just put more gasoline on the fire.

Countryslide lost another half-buck before the market opened, and traded there mostly unchanged through the day. I had fun short-term shorting this one again the last couple of days, but other than some BK "lotto ticket" PUTs, I'm done with it unless it pops up again. The risk/reward ratio is getting out of whack here other than as a potential daytrading opportunity.

The builders got crushed with Centex, Lennar, Hovnovian and KB Homes all off 4% or better. Got shortie? Hope you didn't listen to the assclowns who said "oh we're bottoming out." I'll believe that when I see a few of these guys filing Chapter 11s. I suspect we're now arguing over who's first - not whether its going to happen.

Midmorning the market started to improve a bit, perhaps in expectation of the Fed Minutes. It sure as hell wasn't from Consumer Confidence, which was off fairly strongly to 105. Just wait until it goes under 100 - likely next month.

Speaking of those Fed Minutes, this is what they had to say about Chuckie:

"The growth of real consumer spending slowed considerably in the second quarter after substantial increases earlier in the year. The deceleration primarily reflected sharply slower growth in outlays for goods as purchases of motor vehicles decreased noticeably. Although a spike in energy prices eroded real income growth in the second quarter, there were solid gains in wages and salaries. Despite continued softness in house prices, household wealth moved markedly higher in the second quarter, mostly reflecting rising equity prices." (Ed: Not for long!)

This ought to get cute going forward..... the market didn't like it, selling off almost immediately on the release, although its probably more accurate to say that the morning selloff just continued on its course - with a bot more slope going towards the close.

In company-specific news TGIC disclosed that it drew down a credit line and was immediately pummelled for more than 20% of their stock price.

Krudlow, of course, is screaming for rate cuts. Again. Of course all was fine when the market was going his way. Gee, am I surprised? Oh hell no. Down 280, suddenly everyone is screaming for rate cuts.

Do I hear screaming for rate hikes when we're UP 300? Of course not!

I want to see down -1500. **** Larry Kudlow. Heh Larry, you long? Or is that something else talking?

Did you take some off the table today if you're net short? I hope so. Not because I don't think the tankage will continue - I suspect it will - but because you can't rule out more "surprises" of the nasty kind, and the money belongs in your account where you earned it! Bluntly, I don't trust these ****ers (that would be Bernanke and Paulson) as far as I can throw them.

Ok, technicals.



Niiiiice! One down plunge away from a retest. Sitting right on that nice strong support line. Now note something here though guys - if we reverse here we're in deep **** on the short side, because this could be a reverse head and shoulders!

WATCH OUT!

The Dow and Nasdaq have essentially identical chart patterns.

Now here's a longer-term view.



Assuming we do not head north again tomorrow, our next test just happens to coincide with the 23.6% retracement of the bull run! If that fails we will visit the 1225ish level, as noted before, and below that, the 50% and 61.8% retracements offer support.

Below that the chasm yawns; the 76.8% retrace is likely a false hope at that point; if we don't hold at the 61.8% level I'm looking for 780.

On internals the markets looked like dog****. It was another 90% down day and got a lot worse as the afternoon wore on.

More ominously we are now heading for below 114 again on the Yen; if this continues we are very likely to find ourselves facing a nasty carry unwind in the morning. Asian markets are unlikely to deal well with our selloff, and it may bleed into Europe as well.

Where's the stress? In the same places - commercial paper and the credit markets. Duh. No point in repeating this one for the 493rd time.

Bottom line - absent an immediate reversal tomorrow morning (which you better respect if it happens, because it could be a reverse H&S! forming!) I am looking for a retest of the recent lows and am fully expecting we will pierce them.

From there we're headed south - perhaps on an express elevator to Hell in terms of equity prices.

Expect surprises along the way - although the certainty of a Fed Rate Cut, which many traders are "pricing in", doesn't look so certain to me. While I wouldn't rule it out I also wouldn't trade smug in the idea that we'll get one at this juncture either. That could prove to be a very expensive - and losing - bet.