Seven Deadly Sins

The sins

1. Lust (Latin, luxuria)
2. Gluttony (Latin, gula)
3. Greed (Latin, avaritia)
4. Sloth (Latin, acedia)
5. Wrath (Latin, ira)
6. Envy (Latin, invidia)
7. Pride (Latin, superbia)

Seven Major Positive and Negative Emotions

Here's the Napoleon Hill list of Seven Major Positive and Negative Emotions:

Positive

1. Desire
2. Faith
3. Love
4. Sex
5. Enthusiasm
6. Romance
7. Hope

Negative

1. Fear
2. Jealousy
3. Hatred
4. Revenge
5. Greed
6. Superstition
7. Anger

Dry Tinder Rally - 1/9/2008

I am pulling out the Bear Market Playbook. The patterns going into 2008 are starting to diverge from 2007. The patterns are beginning to look like 2001-2002 type patterns.

Case in point. I bought near the close in the S&P yesterday at 1399. The market subsequently headed lower to 1393. Nevertheless, the pattern last year was to hold it into the close. I felt comfortable with this long because RSI was down to 0.2 - totally ridiculous.

I also shorted ten year futures on the back of the same RSI type trade.

Although the market rallied up to 1406, I was greedy and did not sell it out there. I wish I had because intra-day the market made new lows twice. In 2007, this would not have happened.

But I noticed that the new lows felt lethargic down at 1385, and there was a big spike that drove us up to 1400 again. I thought there was a potential for a DRY TINDER BOTTOM, so I bought back in at 1403 looking for a charge at the highs. This proved to be a very good call. Sold it out at 1413. Market had the classical rush to take out highs.

BOTTOM-LINE: Bear Market patterns are back in play. We need to study the 2000-2002 patterns.

SENTIMENT: S3, we are stuck in Depression.

Employment Number, Recession, Stagflation

Looks like CASE 2 was the right pick.

The Employment Number was ugly, no doubt. I did not buy the close. I was waiting for it to downtick to the lows. There seems to be a MUTATION in the chart. We are no longer closing at the lows but we are bottoming before. We are also making lows and then re-testing without breaking through. This suggests that the market is getting better at playing defense in a falling market.

We are experiencing a MEME MUTATION as well. Last year the dominant memes were SUB-PRIME & CREDIT CRUNCH. The meme for 2008 looks to be RECESSION.

In order for the BEAR MARKET to grow, this meme transference must spread. In other words, the virus must become more virulent and deadly, and the immune systems must be rendered unable to adapt.

The two flu shots right now are FED and SOVEREIGN WEALTH. The FED flu shot has been damaged, and so we are now banking on SOVEREIGN WEALTH to bail us out. We have seen no real uptick due to SOVEREIGN WEALTH, and apparently, we are not cheap enough for the Buffets or the world.

We continue to slog around an S2-S3 regime.

Bottom-line: we'll continue to head lower.

Happy New Year!

The market has made its move for 2008, and it looks exceedingly ugly. Clearly the risk on the downside is if we re-test the lows of November. Futures are right now only 15 points away from testing the 1415.75 lows. This can be done in a day's worth of trading.

The tip-off was the S2s on 12/26, 12/27, and most importantly 1/2. We did not see the procession of S2s since the end of November.

THE SET-UP:
1. Case 1: BOUNCE - if we get a bounce mid-day, within 2 hours, it will be shortable. It could go as high as 1443.

2. Case 2: SLIDE - the typical pattern will be a slide into the close. This is a likely set-up as the FEAR that we are experiencing will carry through over the weekend. Given the BEARISH bent, who wants to carry long positions of the weekend. In this scenario, we'll close at the lows. In this set-up, you BUY to pick up a few points in a bounce over the weekend. This feels very scary, but that is what you are being paid to do.