Tuesday Outlook: Capitulation? Not Yet

“It’s just a flesh wound!”


“Come back and fight you coward!!”

This market is oversold in a big way. Get ready for more bear market rallies coupled with a healthy dose of cheerleading and denial by the financial media.

No doubt some talking heads will be describing Monday’s action as capitulation. Cramer was his consistently confusing self as his reverse course sell refrain hit the airwaves and his viewers’ wallets yesterday. He said stocks could fall 20% and to get out. Being that they’ve fallen more than that already, he must have meant another 20% from here. Either way, he’ll make it up as he goes along. It’s show business folks!

Stocks fell sharply early, with the DJIA down over 700 points at times, but made a furious comeback late in the afternoon to close down by half that amount. Who was buying? That squeeze may have been the opening act of your tax dollars at work. Nothing would surprise me and generating short squeezes has been the government’s primary objective. Reverse Repos from the Fed have been running around $25 billion per day as the Fed “drains” reserves from the system.

Volume was very heavy giving capitulation peddlers ammunition. Breadth was as bad as you might expect.































































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