Coming Back To Life

were you? When I was burned and broken

the days slipped by from my window watching

where were you? When I was hurt and I was helpless

the things you say and the things you do surround me

you were hanging yourself on someone else’s words

to believe in what you heard

was staring straight into the shining sun

— Coming Back To Life, Pink Floyd

morning, the revised GDP number
came out and was ratcheted down to
+0.2%, instead of the previously reported +0.7%. This unleashed an avalanche of
bullish sentiment and comments on Bubblevision this morning, with investment
“professionals” proclaiming that the much-feared recession will be
averted due to the inability of the economy to put together two consecutive
quarters of negative GDP. In addition, we heard others bravely proclaim that
“the bulls have wrested control from the bears with this GDP.” How
should you react to this as traders? Well, pray to whatever god that you
worship that he forgives this people for their utter stupidity and unrelenting
eagerness to lead millions down the path of misinformation.

is amazing that regardless of what the market does, we continue to witness
surprising complacency and bull dreams lingering abound as brazen investment
“professionals” continue to chant the “worst is behind us”
mantra. Truly, it does not appear that many are prepared for the potential of a
deeper retest into the areas of the early April premarket gaps in the S&P
500 and Nasdaq 100 futures contracts.

months ago, my commentaries pointed to these gaps in the S&P 500 futures
from April 4-April 10 where I stated, “It is not a question of IF these
areas will be tested as it is WHEN will they be tested.” Certainly,
these statements were made at a time when overwhelming bullish sentiment was
running amok and therefore generated a significant amount of negative feedback.
(Remember, as I’ve stated before, my “hate mail” indicator is a great
psychological gauge of whether to be long or short.) In reality, the scenario we
described back in early May has certainly played out perfectly over the past 3
1/2 months. So as many have “died to believe what they heard,” we
always continued staring straight into the shining sun.

many months ago, I stated that the market would be on its last prayer when the
Federal Reserve became ineffectual and irrelevant. Certainly, this
realization is presently coming to fruition as the “don’t fight the
Fed” mantra is being quietly tucked away under defunct Etoys stock
certificates by the perennially hopeful. Another interesting development that
may be occurring is the growing ineffectiveness of the analyst community. After
years of self-fulfilling prophecies ranging from ludicrous price targets on
stocks to the “buy the dip” mantra, the Emperors of Wall Street may be
finally revealing that they have had no clothes all along. Not only has the
elite financial mafia of Wall Street proven ineffectual since the commencement
of this bear market, but they have quickly digressed into embarrassing,
grotesque relics of a period where people perhaps did not spend too wisely, but
too well.

the fabled summer rally now appears to running out of time and the Federal
Reserve running out of bullets, it appears to be only a matter of time before
the market engages on the real move down that will take the Dow Jones Industrial
Average well below the 8,000 level and the S&P 500 index into the 700-800
zone. As we still believe the chances for a short-term rally exist, it
will not be an investment grade bounce and only serve as another wonderful
selling opportunity.