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.