Remember never forget the power of greed and fear, and the propensity for investors wanting to own stocks (taking long-side) and fund managers chasing performance as we saw today especially if they think the bull-train is pulling away they will want to hop on board.  Please, remember when in doubt as to market conditions/direction CASH is always king (or queen depending on your gender J ) please trade cautiously and be quick to protect your profits. I’m guessing that this the days ahead we will become embroiled in a major bull-bear battle as we head into the thickets of earnings-season…it will not be pro forma earning that move the tape, it will be guidance or lack thereof!

Its a start to another week and we have to ask will this Monday be a Mutual-fund or Merger Monday where we see a gap-up/run by the early futures players.....and should we expect a bullish tone for the open due to news that is hyped or an external event...we are very oversold on the 15/30/60/120 and 180 minute charts so even though we ended at the lows on Friday we should not discount such an attempt by the futures player to orchestrate a huge gap-up….the questions is will it be a GAP-Run or GAP/Crap….. I would not be surprised if they  attempt to press a Gap/up and then a run...the markets could get a boost (on dollar weakness) or succumb to selling on dollar strength again so this will be an important indicator to watch for, we will need to watch crude as well as its been , the greenback and the Asian markets very closely....I am also watching the Russell-2000 for directional clues as speculative money is again finding its way into this sector!    Please take on LONG positions very carefully as well as SHORTS  at these levels as the risk to at these critical levels is compounding

Strap-yourselves, as it is sure to be another wild another wild rollercoaster ride!! especially during as this week is the heart of earnings reports!   The question is do you want a ticket to embark on this amusement ride...this is going to be a very difficult week to trade/invest as we are going to see a massive wave of earnings hit the tape, we have a host of economic releases as well....not to mention a huge undercurrent of political news and events....I expect volatility will be quite high and we will have many bouts of pops and drops...and a trader or investor not nimble could lose a few fingers or become a proverbial bag-holder! Currently the trend is down, and the selling has been on significant volume...but that could quickly change as we have the following zones of significant support to contend with and the dip buyers may emerge with the onset of a short-squeeze, or the bad-news bears could taste blood and grind the bulls into chuck....so until key levels are breeched to one side ort he other I'm recommending to my passive folks to remain on hold (sit on your hands...(see technical section below)....remember these quant-programs are great at developing head-fakes!    

After months and months of an artificial rally, where 80% of the gains in the indexes have come on 31 Mondays, of blatant upward manipulation the indexes now look poised to reverse.  I believe wholeheartedly that we have either already posted or we are about to post the third major top in the various indexes in this decade; and maybe it happened this past week or maybe we will start the mega-roll-over in the next several weeks as earnings season comes to a close or at my next major inflection turn date that is forecasted to fall in February 5^th to the 9^th from my vantage point the major key at this juncture is not to attempt to pick the proverbial so called exact top….this can be a foolish endeavor as the level of market manipulation is at historic highs as the Fed and treasury and major-lecherous banks/bankers who are a primary-responsible party to the major economic implosion of the housing-sector and debt-markets. This market top or what I’m calling an exhaustion-top that I’m forecasting/predicting will eventually lead to a very significant stock market decline (and it will act like a cancer, spreading to the global markets as well); and this reversal/drop could be far worse than the previous two major stock market declines we have experienced in the past decade according to many of the technicals and sentiment indicators that I utilize.

This week we will certainly have several events that will be significant market movers even if the demonizing of banks and the lecherous banking officials disappears briefly. The most significant being the FOMC rate announcement and bias statement to be released on Wednesday, no one expects any changes but the markets doesn’t even want a slight whisper that conditions have weakened since December. A few economic reports have indeed softened and we have heard from several banks this past week that the worst may not be over. I doubt the Fed is going to want to spread doubt so even if there have been signs of weakening I doubt that they will acknowledge it now…they will craft their bias statement in my opinion to avoid negativity.  The next really significant economic event will be the release of the preliminary 2009Q4 GDP on Friday; and the GDP number is expected to have risen by 3.5% to 4.5% in 2009Q4…depending on who’s numbers you partake of and this is a huge increase. At best it’s a pure technical bounce on the back of massive government (taxpayer) stimulus, and the numbers will be artificially inflated due to inventory depletion **[ GDP = private consumption + gross investment (been very low) + government spending (extremely inflated) + (exports − imports) ]** and these pro forma numbers are not even close to an indication of a surge in economic activity. However, the lamebrain talking buttheads on the various bubblevision networks will be acting like giddy school girls as they report the inflated numbers, so I warn you ahead of time please do not be fooled by a hot GDP number; (remember according to the Fed they are expecting that GDP in 2010 to be in the range of 2.4% to 2.7% ) Friday's number will be a statistical anomaly but the markets could react to a hot number that should be ignored If by chance the number comes in significantly lower 1.7% - 2.5% we could see a strong sell-off since 4.2% - 4.5% is already baked in the proverbial cake.

I have been sounding the alarm-bells since late-December that the indexes (even on a global basis) were due for serious correction. And now it appears we are likely embroiled in one and it is way long overdue. Now please remember from my past writings this is January, (the release of a deluge of fourth-quarter earnings and fund-managers reallocating funds) and we often see a mid-month correction, which is normal. However, this one may be entirely different as we have a massive amount of pent-up profits, external pressures (political and geo-political) and those holding stellar profits will no doubt get caught up in a stampede of fear if key levels of support are broken…we do not want to become perma bears until strong levels of support are breeched as we have incessantly seen what I believe to be massive waves of stock market intervention/manipulation that lasted throughout the fall, as each time we have seen a retracement of 4-5% a flock of stock market fairy-godmothers arrive and they wave their magic wands and presto we have several massive short-squeeze events, that reverse the bearish-tonality….so what does this weeks selling mean….right now it means we get a normal seasonal selling event with potential for something significantly worse.

I believe this correction could feed on its self and create a water-shed even if the fairy-godmothers fail to step in at or just below critical levels of support as the technicals (many fundamentals) and charts [Weekly and daily….see technical section below] are screaming at us that this could be a Wile Coyote type of sell-off a little analogy I like to use…and we could hear the talking heads after several more days of selling shouting as only they can “look-out-below” as the charts are signaling this selling cycle may be anything but normal. I’m looking for a 19-25% correction on this down leg, then some renewed buying mid-February through March maybe even into April…then I will be shouting look out below, as then I believe we will be setting up for a 45-60% correction starting mid April and lasting well into July maybe even into early August according to my E-Wave and Gann wave projections….then we could see a potential pre-election rally.  

As I wrote about these past several week and showed the sentiment indicators as the begging of January, the bulls were running wild and rampant. And the various bubblevision networks were displaying showed nothing but hypsters and perma-bulls touting their own books, and the guests were extremely bullish displaying a massive wave of bullish sentiment.  But there was an old savvy trader from the great state of Maine that was calling for a very nasty top just 7-8 days ago, The Maine guy (an undiscovered real trader/investor and economist with no ties to Wall Street, and allegiance only to his subscribers) wrote about the potential for such an exhaustive top extensively during the past month it was called almost to the day!

My propriety and intensively analytic “turn time-wave forecast” was strengthening far greater than the past 6 such periods that were highlighted and stronger than I had seen in many months, and the wave/cycle was pointing toward a major inflection period ahead (meaning a trend reversal with a 80:20 probability), the window tightening very significantly as we approached my potential turn window....and as I stated than, according to my wave analysis we had multiple waves converging and a very significant major wave inflection & Fibonacci collision about to hit and my projections were for a possible/potential turn in trend hitting the overall markets on/between 01-13-2010 to the 01-19-2010; and I predicated it by stating that since we have been embroiled in very strong bullish up-trend (on very anemic volume during the past 6-8 weeks) from the March 6th lows. I wrote that this corrective wave could be (I always emphasis the key-word could) be the start of a significant bearish corrective period ...my propriety system and analysis is telling me that this could be a significant correction period lasting between 14-21 trading days...with the potential for a slight retracement after the initial down-cycle then another downward corrective wave will likely play out that will create great doubt amongst the bulls and long-traders only….my forecast was for the following:  

I am looking for a potential drop of                   1,450-1,600    Dow points

I am looking for a potential drop of                         185-270    Nasdog points

I am looking for a potential drop of                         120-165    SPX points

I am looking for a potential drop of                           85-125    Russell-2000 points

 As I stated to my loyal subscribers it takes guts and resolve to bet against the herd/crowd; but as I showed through extensive technical analysis, backed up my bearish/negative economic observations and analysis of the data, and my fundamental analysis and bias coupled with my contrarian readings; it was not as difficult to stay the course as expected, and the proverbial planets all lines up perfectly! Reading the charts and looking at the less obvious technicals as presented (mostly centered around volume and buying/selling interests) I never had a second thought about sounding the warning bells for a near-term corrective slide. I have been writing about this potential reversal for several weeks now and suggested setting up for it by playing **March-June** Puts and or Put spreads on the indexes, ETF’s and holders and to Short outright the high-beta high-flyers as when a sell off comes they drop the fasted and hardest…I also suggested buying calls on/or the leveraged short funds like (SDS, MZZ, DXD QID etc) outright!

I would greatly appreciate a favor from all who prospered from my calls these past months, I would greatly appreciate it if you could help me spread the word about T-Waves (you could send out emails to friends, colleagues or acquaintances expounding on the benefits you have had by becoming a T-Waver….and what they could look forward to if they became a T-Waver, they will certainly thank you as they begin to prosper by using the service; they will owe you one for brining my service to their attention)…..I need to gather in more subscribers [remember I only advertise from the lips of satisfied subscribers] so T-Waves stops hemorrhaging money each month (will help to get Ruth off my back); These past few weeks have been stellar as many have reaped great returns and many subscribers have made hordes of money and I could not be happier for you all.  As I have always stated I work hard (very-hard for my subscribers, putting in long-days; (I often joke about the fact that I works for less than $0.75 an hour for my great-loyal Diamond subscribers….even less for the other packages)…I endeavor to peel back the vast layers of illusion when viewing investing and the markets and to break down what I’m seeing and observing into cohesive and straight forward actionable (tradable) market suggestions and ideas! I am always looking for new and explosive ideas for our various portfolios, Swing Trading, Option Trading and Value Investing portfolios….not to mention great ideas to act upon in my real-time-trading room.  I am here as always to provide my loyal subscribers and friends with the very best in thoughts, fundamental analysis, conjecture, and technical insight for you all, in a non-bias manner as I have no allegiance to the Wall-Street-manipulative thugs not to the lecherous, banks and brokerage/investment firms, who are the parties that are mostly directly responsible for our economic implosion and the meltdown of the global financial markets (credit/debt) markets as well!   

The various stock market indexes suffered their worst week since we were embroiled in the very depths of the bear market nearly over a year ago as investors focused on increased uncertainty in Washington and concerns about weaker economic growth and a slow-down (cooling-off period) in China.  

The indexes plunged on Friday….as fourth-quarter earnings which topped analyst’s estimates failed to inspire investor’s to open their wallets and buy, it again was a sell-the-new-scenario as the very lofty expectations were not met or beat….also it was difficult too overcome looming contagions over U.S. bank restrictions that would start to handcuff the lecherous and overly-leveraged-greedy banks from taking on massive risk while being backstopped by American taxpayers….also the premise of additional monetary tightening in China in order to cool the huge run they have been having depressed the commodity sectors as I forecasted it would.  

As I suggested several weeks ago, we would likely become embroiled at least initially in a sell-into-earnings, and perceived strength after the massive run up into the end of 2009 as many funds and owners can now avoid capital-gains for another year.  This earnings season is now fully underway and we have seen that many of the proverbial shining star “highly hyped” wall-Street darlings stocks have sold off after their earnings release (many are now selling off ahead of earnings like AAPL & AMZN).  

The first major stock to report a few weeks ago was Alcoa and that stock which had an amazing move higher into earnings trading at a high print of $17.60 prior releasing earnings subsequently sold off and it now currently trades at $15.25 a drop of over 15% and others have followed this path/pattern (INTC, IBM, JPM to name a few, all of which we shorted) as they all experienced negative reactions after their earnings releases. The reasoning behind the selling is basically-simple from my years of experience, (as I have repeated written/expressed) these stocks had simply rallied too far too fast and the earnings event premium was already baked into their relative prices and then some. It is important to remember that indexes and markets almost always overshoot as they historically act like a pendulum; and they historically over-swing to far to either the bullish and/or bearish side….please remember that the various markets are basically an apparatus wherein we can measure extremes of human emotions basically fear/greed!

It is also very important to remember that almost everyone (I’m an exception as I like to play in the real world0 loves to be on the winning team….so reflect a momment as to how often folks root for a sports team that is winning even when they don't like the team or even the sport, many do not even at times know who is playing; as they are driven to flock to winners. The same thing occurs with investors, mutual fund managers and especially hot-money hedge funds as they simply jump on board the so called bull-train (asset class, stock, sector etc.) and as a result they drive it higher into a significant event such as earnings…then just when the convince the next herd of bagholders into wanting the stock John/Jane Dow the investing public (no one wants to miss the bull train leaving for the land of milk and honey as the premise goes) gets sucked into buying the asset/stock as they too want to be a part of a winning team, then bank the smart-money players (the pro-desks like GS, MS, BAC etc) simply pull the proverbial rug right out from under them and sell the stock right into the herd’s buying endeavors, and when supply dries up, so does the rally…therefore its crucial that investors and traders (my folks know this) as a rule stop and look before they leap, or they must either subscribe to a great service like T-Waves that does it for them…as we look at fundamentals, valuations and above all charts before buying a stock into an earnings release or significant news event. If it has traded higher in parabolic fashion before earnings this is a major danger signal….and you should stay clear of buying in at the tops as so many investors do (remember the mantra is buy low….sell high)….you do not want to get caught into a trap where the earnings or new is already priced in and you become a proverbial bag holder.

Index              Move on Week                           Weekly                   Year-To-Date

                                                                        % Change                     % Change___________________

Dow                 Down  436.67                          Down  4.12%           Down  2.45%

Nasdog           Down    82.70                          Down  3.61%           Down  2.81%

SPX                 Down    44.27                          Down  3.90%           Down  2.09%

The selling was very broad-based hit sectors from banks, technology to materials….The Dow on Friday coughed up 216.90 points, or 2.09%, to close out at 10,172.98, marking its third straight day in the red and its biggest one-day drop since 10/30/09, and worst yet the tape shows that it has plunged 552.45 points, or 5.15%, over the past 3-days marking its biggest three-day point loss since November 2008 and its largest three-day percentage drop since March. For the week, the Dow was down 4.12%, marking its worst week on a percentage basis since the week ended March 6 (right before the remarkable relief rally started….also this Friday marked the Dow's fifth straight session of triple-digit point moves, its longest streak of such moves since December 2008 **volatility is back in a big way…..now the Dow is down 2.45% for the year to date….remember as goes January goes the year, according to the mantra.  

The SPX choked up 24.72 points or 2.21%, to close at 1,091.76, representing its daily performance since 10/30/09, worse yet for the week, it dropped 3.9%, its worst weekly loss since October; and it has reversed course on the year as its now down 2.09% for the year to date. All sectors ended near the sessions lows, led by technology and financial groups. 

The Nasdog was a real-weakling this week....dropping 60.41-points on Friday....or 2.67% to close out the week at 2,205.29 its biggest one-day drop since October. The index also logged its worst week since October with a decline of 3.61%; and it leads the indexes down on the year as its now down 2.81% for the year to date. Google dropped 32.97-points, or 5.7%, to 550.00 on the Nasdog despite reporting very-decent fourth-quarter earnings however they missed the streets-whisper numbers and the guidance was lackluster. The huge declines this week came as investors voiced continuing concerns over the potential fallout of restrictions to limit the size of banks and the risks they can take on and the limited or should I saw lacking forward guidance of the tech-firms reporting earnings, as they failed to inspire additional buying at these lofty levels. 

Much of the selling on Friday could be attributed to news out of Washington, where Obama is looking to reduce the risk being taken on by the big-banks and prop-trading firms by eliminating their preferential bailout-status, meaning that that can no longer use FDIC insured deposits to fund their trading and manipulative market efforts….we also saw news where more Democratic senators came out against the nomination of B-52 Bernanke to a second term as Fed Chairman…and these new uncertainty contagions wherein senators were expressing doubt about their willingness to vote in favor of Bernanke, plainly added to a raft of investor anxieties, and when investors get skittish or anxious they almost always hit the sell-buttons (especially with massive pent up profits) and ask questions later. The proposal from the Obama administration to limit the size and activities of the nation's largest banks sent stocks in the sector sharply lower, a move that bleed over into the huge loss on Friday; and of course the news that China was taking steps to limit their overheating “bank lending” which would be the first significant move in a large “hot” economy to scale back on the massively aggressive monetary and fiscal stimulus efforts being injected by central-banks to mitigate the financial crisis *the negative news flow created a near-perfect storm for the equity markets*.  

Before you become a perma-bear please take note: we have to remember that the nasty selling of the past three days is a meaningful retracement; it is still just a fraction of the massive gains from the March lows; as the markets were “very” overbought and I had been warning that the indexes and global markets were overdue for a decent retracement; as a reference for the perma-bears even after this 3-day purge the Dow still up 55% from its lows seen just 10-months ago in March. 

While much of the attention this past week has been on the political comic-relief show (Howdy Doody, Barney Fife show) I believe that China's move to scale back on their stimulus endeavors presents a significantly larger contagion for investors heading forward. As a primary market catalysts for the markets and the Wall-Street spin doctors was the so called extraordinary growth of emerging markets especially China. In reality the rally is more likely attributed to the massive amount of monetary and fiscal stimulus raining down around the world, but most evident in the USA and China! From my perspective the current so called growth has been the result of massive inflows of cheap and easy monies…being pumped into the system….the negative premise I have risen is that if the economy were darn healthy, why the incessant inflows of cheap and easy monies from the world’s governments! Since this spurt of growth can be attributed almost entirely in my opinion to the stimulus infusions; so in my opinion since so much of the global-growth story/hype has been due to stimulus that its basically impossible to differentiate whether the economy (global) can stand on their own, when the cheap and easy money flows are stopped and worse yet when they are pulled back!

The markets responded to some direct political contagions this past week, I expect more

On Tuesday Scott Brown a new republican did the unthinkable (he beat a lamebrain democrat) and won the long-term democrat held Massachusetts Senate seat held by the Kennedy's since the 1960s and he did so by waging an anti Obama campaign pledge in essence, and Massachusetts is one of the most liberal states in the union where democrats outnumber republicans by more than 3:1…and they being disgusted with Washington and the healthcare proposal which was far inferior to theirs voted for a republican and for a change. It was the shot heard round the political world and means that no democrat seat is safe in 2010…to counteract this huge swell of anti Obama sentiment; the democrats immediately went into battle mode and they returned to what has worked best for them a populist political ploy that has worked so well for them in the past. They went into attack mode by blasting the Fat Cat Bankers and Wall-Street firms who were most responsible for the credit market implosion and calling for tighter regulation on these major financial institutions that created the force-5 hurricane of controversy and they succeeded in distracting and refocusing the average American’s attention on them instead of the proverbial voter revolt in Massachusetts; and old and reliable tactic its basically called populist politics….{populist politics is a political tactic that creates conflict between average people and the elite and urges social and political system changes}. It’s a common political deception to distract you from other events that could have been spotlighted

There are growing rumors that Treasury Secretary Tim Geithner is about to be fired as part of the populist shakeup. Geithner is seen by the masses as being favorable to Wall Street and his bank bailout plan has failed. Banks are not lending even at 5-8% of what they were in 200-2002. Geithner has also been tied a cover-up scenario at AIG his too big to fail policy is linked to the current Wall Street bonus outrage; so will he be saved or sacrificed? Will he be a proverbial scapegoat for the administration or the B-53 man; I’m betting the Geithner will get the ax and Bennie boy dodges a bullet!  

I am expecting that the State of the Union speech on Wednesday evening (something that could really shake up the markets especially after the Fed rate decision on Wednesday) will contain populist remarks to further endear the masses….and it could produce a volatile market environment! 

Will they or will they not….confirm Bernanke for another term as Fed Chairman. Senators Boxer and Finegold, both up for reelection this year and suddenly vulnerable, spearheaded the anti B-52 man effort. Please note that by my account if the B-52 man fails to be confirmed there could easily be a 7-10% sell; and since there is only a week left in his term it’s getting dicey.  Bernanke’s problems are not going to just disappear either as there is another Fed meeting this Tue/Wed and his confirmation contagions will likely be on every bubblevision news network; and he will be a big financial news story this week.