US MARKETS COMMENTRY.-fishhook

The FED has lost all credibility. The bears pounced upon the market today with a vengeance. Sellers abounded, and buyers were nowhere in sight! The rally yesterday for appearance sake after the FED announcement couldn't hold overnight, and like a bad dream for the bullish contingent, things just kept getting worse and worse during the day session.

If close below S&P 1100 that is a breakdown for the short term. If close below 1090 that is an even bigger breakdown, and probably affects the intermediate term performance of this market. The bulls did not mount any meaningful rallies today, and the bears just plundered as if the FED just would have been better off keeping its mouth shut! The corral fence to the south 40 has broken down and is in shambles, as the bears are running rampant in the pasture and were last seen heading farther south!

This is a BIG trend day down. Recall that I have been talking about the small range of the market for several days, and the energy that gets stored when that happens. I emphasized that when we get that much daily range compression, the resulting breakout is very significant as all that stored energy gets released. You will see this time and time again in the market if you look for it!

Finally, a note about "boundless bonds"! The bonds skyrocketed to a point and 1/2 advance today. Fear is rampant! The bonds were actually overbought going into the FED announcement, as the FED's cousin, ED :-), had been buying them in anticipation of what was coming! I have mentioned in the past that what is overdone, can become more overdone, and this is exactly the situation we are seeing in bonds. They are now incredibly overbought! Some of you may think otherwise, and I certainly respect the bullish perspective, as nobody is quite sure at what level this roman candle will burn out. I will respectfully say that this incredibly overbought situation occurs very rarely, and nobody is going to want these bonds when this panic has run its course. The impressiveness of the rally will pale in comparison to the speed and magnitude of the fall.

The OER 2010 Express has been derailed as the FED has stepped on its own "Obama". It will be interesting to see how they extricate themselves from the ugliness of the day, and at the very least, a breakdown of the short-term fun they have had since early July. I see as we speak, that "someone" is throwing some of that "unlimited money" around right now! Let's see what they can get done, as again, it is the CLOSE that is critical. It is doubtful that any honest market can ramp this thing back up to 1100 today! (Did I go too far? :-))

have a great time, all the best!!

(Topic source -fishhook 4M USA )