I want to lead today with a message of hope instead of one of doom and gloom.

Two words: Mike Huckabee.

Mike was a candidate that I had basically written off as a "no way in hell" odds guy for the Presidency. But his showing in Iowa was amazingly strong, and frankly, he's right about just about everything.

From an investors' perspective, he has the message you want to hear. Its spelled "Fair Tax".

I know there will be people who want to attack that, but please be informed before you do. The Fair Tax, should it be enacted, would lead to a boom in American competitiveness, business, and the markets that would outpace all other nations and perhaps even surpass what America saw in the early 1900s.

Believe this - if we end up with a Democrat in the White House - who would almost certainly be Obama or Hillary - you're going to see major tax increases in a raw attempt to push towards the magical 50.1% of voters paying no federal tax. The purpose of such a push is transparent and obvious on its face - nobody ever votes for a tax increase on themselves! So by reaching that magical nirvana, the Democrats believe they can cement a permanent position in power - and they may be right.

Of the Republicans, there is only one choice I can find who will actually accomplish improving American Competitiveness and fix our tax system - and that's Mike.

I rarely make political contributions. To anyone. I believe most politicians are snakes and interested in only one thing - getting re-elected - no matter who they have to screw to get there, especially if the screwee is you.

Mike may have this flaw. But if he does, I'll take it if it means that we wind up with an economy that prevents the implosion of America.

Anyway, as they say, "do your own Due Diligence."

BTW, don't bother with the questions about Ron Paul. I've already expounded on why I can't vote for him; if you want to see it in detail head over to Musings and have a look-see.

We got PPI data today and the headline number came in hotter than expected, but the core was inline. It didn't mean much.

WalMart's earnings, on the other hand, did.

" "It is no secret that many customers are running out of money toward the end of the month," Scott said on a recorded conference call. Higher fuel prices, interest rates, utility costs and "more financial pressure" are hurting sales in its international market, including Mexico and Canada, he added."

That, in the coming quarters, will be more succinctly spelled "Recession."

Home Depot reported a big second quarter profit drop - 14.8%. Gee, you think? Their Supply operation, which they are trying to spin off looks like it might be in trouble too. That could get interesting, considering that this, plus even more debt, is how they've been buying back shares. What happens if that deal goes "poof"?

Cape Coral, FL has emerged as one of the "ground zero" locations in the housing bust. And with good reason. The boom found one of its most insane centers there, with home prices doubling twice in the space of three years in many cases. Now the boom has turned to bust, with more than a 2 year inventory of homes, foreclosures sprouting everywhere and even more pain to come.

Panic has come to the Money Markets! A commodities money market used to park overnight funds for commodity traders locked redemptions today. This is a big deal guys even though it is a small amount of money and only affects commodity traders and hedge funds because it shows that the credit monster has now "jumped the fire lines" and landed squarely in a place it is NEVER SUPPOSED TO BE - in money market funds!

"Within the last 10 minutes, CNBC reported that Sentinel Management Group has asked permission from the CFTC to halt money market redemptions."

This is big because money markets keep their cash in short-term commercial paper. This paper is supposed to be extremely safe and essentially never experience disruptions.

Wrong guess!

Oh, but this is "contained" so the talking-heads say.

(By the way, later the update came that this was a "money management" account - not quite the same as a money market, but heh, is it really THAT much different? I doubt it.)

Uh huh. So they claim. How come "contained" seems to mean "contained to Planet Earth" on an increasing basis? "Contained" spread to the commercial paper yesterday, and to the money markets today! Yes, only a bit, but guys - these are "never supposed to happen" sorts of events!

Thornberg Mortgage (TMA) was halted late this afternoon on a T1 (news pending), down big (46%) before the halt. After the market closed they announced they will not be paying their dividend on time!

Remember the last assclowns who did this? That'd be AHM and now they're GONE! Those of you were able to find shares or paid up for their PUTs - congratulations!

Heh Goldilocks! Is that you in there? Damn, where did she go? I've head of "eating 'em raw" before, but this time you didn't even leave the bones did 'ya?

I actually had my "Dive Dive Dive" audio ready to go, but it got bailed out in literally the last minute when the market stabilized just above the level where that was appropriate.

So you get General Quarters instead..... because tomorrow could easily be Dive Dive Dive!

Ok guys, Charts!

First up is the industrials (click for a full pane)



The industrials are below support established last week and now clear down to the February lows. The current closing level is in fact on a support level, but it is extremely weak. Taken all on its own this augers for a visit to the 12000ish level (March Lows) in the imminent future.

Now let's look at the Transports:



The Transports confirm. The previous lows are breached (only by a bit, but breached is breached!) Note that on a relative basis they have fallen faster than the industrials and their February/March support level is not far from here - around the 4710 level. I do not expect this to hold and believe we are looking at the 4500 level, which is last summer's lows - as a minimum downside target.

What does the SPX tell us?



Trouble! Again, we cleared the last-week lows. Not by much, but clear is clear. We are also in a clear area which means no support to be found here; the next real support level is to be found at 1375ish, which is the February lows (again.)

Now let's look at our last bastion of strength, the Nasdaq. Here's the Composite:


What do we see here? Same deal. Clear of the support levels (they did not hold today) and we're now clear down to 2330ish, February's lows. But let's see.... do we have confirmation from the NDX?



Not quite.

And it is for this reason that I posted the "General Quarters" sound instead of "Dive Dive Dive."

Don't worry guys - I think we're going there, and tomorrow at that. Why? Because after the bell AMAT, one of the Nasdaq 100, posted earnings that were disappointing and is getting hammered right now in the aftermarket. We will have to see what the conference call brings, but unless I am misreading this horribly or something "good" happens overnight we are going to crack that support level tomorrow like an egg that got stomped on.

As we came into the close I was sorely tempted to take off all my shorts (including the index stuff) as I have a dandy open profit right now on them - but decided with literally 2 minutes left to leave it all open. We shall see tomorrow if that was a good - or bad - choice.