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.