This still looks like bear market action

We love Bill Gates…who is now going to retire from Microsoft
(
MSFT |
Quote |
Chart |
News |
PowerRating) in 2
years. Any man that gives so much away in order to help others…is aces to us.
We live by a very important motto: ALWAYS DO SOMETHING FOR SOMEONE YOU DO NOT
NEED ANYTHING FROM. Think about it.

On the other end of that spectrum…Congress just gave themselves another raise.
Wouldn’t it be great if we all could do that? Wouldn’t it be great if we all
could vote on legislation that totally affects us? Have you seen the lobbying
legislation coming out of Washington? Don’t look too hard.

Several weeks ago, in a flippant comment, I stated we will see a Starbucks store
in every home and iPod on our toilets. Well, we got one out of two. Just
invented: a cutting-edge gadget combining a portable music player and a toilet
paper dispenser. The state-of-the-art device – called an iCarta – makes it
easier for people to listen to beats while using the bathroom. It is designed,
according to the US manufacturers, to “enhance your experience in the smallest
room”. We do not make these things up.

Zarqawi dead…leads to 452 raids and deaths of 104 terrorists…and the
mainstream media is almost silent. They will gladly scream at the top of their
lungs every bit of bad news…but can’t stand to report good news. Shame on
them! They all need to go back to Journalism 101…or maybe they were taught all
along to be selective with their coverage.

Did you watch the U.S. Open Golf? Always loved watching golfers hitting shots
out of bales of hay and hitting putts on tile. We love watching 10 foot putts go
40 feet past the hole. Makes us feel much better about our game.

In our last report, we stated that we expected a bear market rally. Little did
we know it would happen in one day as the market had a one day romp. We have bad
news for you. We are still less than impressed. In fact, this type of headline
action reminds us of exactly what happens in a bear market. We continue to
believe it is far more important to pay attention to the overall negative
condition…and not the bounces. Bounces in bear markets serve one purpose…to
relieve the deep oversold conditions…and this market just experienced one of
the most unprecedented oversold conditions we have ever seen.

Shorter-term, anything can happen. We can bounce more. We can roll over. This
will not change the direction of this market. Before we get into the overall
market, let’s talk about the short-term. The best news about the market is that
all our sentiment gauges continue to be off the charts. The VIX
(
VIX |
Quote |
Chart |
News |
PowerRating) went
straight up to 24. PUT/CALL figures have remained very high. ODD LOTTERS are
shorting stocks at the highest level in years. NYSE MEMBERS are shorting at the
lowest levels in decades. But that is all sentiment talk. Sentiment is a
secondary indicator. If you hang your hat just on that, you will eventually be
steamrolled. You must keep in mind, bear markets treat sentiment a lot different
than in bull markets.

Lastly, the ugliest looking and MOST SHORTABLE charts are in the areas that had
been doing the best. This includes the OILS, COMMODITIES and most BROKERS.