....and then the fighting takes over.....

Ahh me....let me set the stage.

I start this journal at a very low period in the markets. We have undergone weeks of pounding in the Nazty, and the Dow just fell prey to the selling a week ago. Yesterday, all the US markets sold off horribly in a death spiral that made everyone run for the hills. This morning we sit at levels that are moderately better, but one cant escape the stench of pain in the air, and the mood that we are in for far more flogging before we can declare a bottom.

The Tell? Low interest rates. Or rather, absence of higher interest rates. It is truly the weight around the market's neck.

The one market sage that I can say that I follow in a religious sort of way is Jim Cramer. This morning Jim started to use Interest rates as a tell for the market bottom. His article merely suggested that this could be a good tell, however I believe that this is much more significant a tell for the moment we are experiencing in the markets today. Once bonds back off (bonds, for the uninformed, have been on a tear in price for the last six months, which means low yields), and yields come up significantly (like to 4 or slightly higher on the 10 year) we will be able to say that the market is making a positive turn north.

This will say to me that the "fear bid" currently existing in the bond market is unwinding, and that the markets will be a recipient of the dollars. "Why take 4 when you can do 8 in a rising market". This ultimately will end once bonds back up to 4.5-5 on the 10 year because at that point, the market will not be as attractive on a risk/reward basis.

Let me also say something about this "fear bid" that I keep seeing. The fact that this market can be ignoring some of the outstanding growth we have been seeing from American public companies, real hard data that is completely ignored in favor of speculating what a Socialist Europe (which it is and always has been) means for our markets is absolutely insane. How can we fear terrorism to the level that rational data collection and analysis goes by the wayside? I will always side with cold hard facts in the face of an ever falling, fear encrusted market. That is the beauty of the market. You don't have to sit there and complain, you can put your money where your mouth is and step up behind your beliefs. My money is on the reality of an expanding market, not the fear of things that are at the worst hyped beyond recognition, and at best representative of a small minority. Lets not forget that the backdrop of Democratic fear stumping, combined with terror threats provide a layered fear landscape that takes twice as long to work it's way through the news cycle.

Strong hands folks...Strong hands indeed.