At Least It Closed Off The Lows...

Back in the turbulent 1970s when I commuted to and fro from
Wall St., I would catch the 5:39 home from Grand Central. I
would frequently stop in the bar car for a smoke and a Dewars
on-the-rocks. The bar car would be raucous after another of
the many down days for the stock market, and the joke was to
have one of the many brokers hop aboard and proclaim "At least
it closed off the lows!"

At last week's close, both bulls and bears seemed fatigued. I
was looking for a quiet week ahead. Instead we got a strong
rally up to important resistance, a day of top action, and then
a sharp sell off that broke the suspiciously mild uptrend
underway since the Jan. '08 low. What can one say but that it
was a typical bear market action. The field is open for the
bears in the week ahead. We'll see what they can muster.

A word about sentiment. My e-in box is cluttered with sentiment
charts showing there are many more bears than bulls. The
contrarian implication is that a buy point is near. But I
remember talking with fabled technician Joe Granville years ago
and Joe reiterated a favorite of his: "In a bear market, the
bears are right." That stuck with me over the years. I have always
taken it to mean that heavy bearish sentiment will ultimately
point to a rally, but that a hefty, tradable rally need not come
right as the bears get heavily bearish. It can take a couple of
months.

With obvious increased inflation pressure, my SP 500 Tracker has
dropped to 1300 fair value.

I am hoping for a more solid bottom for this market at some point
over the March - April interval. I think we are going to need
some help from a cool off in the mania for commodities to get it.