Time Price & Pattern

a. There is an alternate count in EW that suggests we have one additional selling wave before this is done. Btw, there is always an alternative count, one reason I do not rely on EW alone

b. Please be wary of the mark to market, Thu, if this passes, it could easily create a short covering rocketship

c. We are in the midst of a couple of turn dates and the March equinox - there is a rally coming, it is only a question of not getting killed timing it

d. A number of traders I respect are turning bullish in unison

e. Cramer is bearish

I am going to start accumulating bullish positions

The precipitous stock market declines are reflected in the results of this week's survey of investor sentiment by the American Association of Individual Investors (AAII), courtesy of Bespoke. Investors are now at their most bearish levels since the start of the survey in 1987 with 70.27% of respondents currently in the bearish camp - a necessary prerequisite for a major market low.

As usual, some interesting thoughts were also contributed by Richard Russell (Dow Theory Letters): "The stock market doesn't live in a vacuum. This huge decline in less than two years is telling us (me) something. It's a warning. I think it's a warning of very hard times to come, maybe as difficult as those times we saw during the Great Depression.
"I know that I stand pretty much alone with this scenario. I don't think most Americans see or even envision the potential danger ahead. They don't believe in the 'truth of the stock market'. Over 60 years of studying the stock market and the economy, I've learned to believe the 'language of the market'.

"I know that great bull markets and great bear markets tend to overrun at the extremes. Let me leave you with one thought - prepare for the extremes. Just as the bull market that ended in 2007 rose to the extremes, I believe this bear market will go to the extremes."

The Dow is currently down by 53.2% since its peak of October 2007. Chart of the Day points out that since 1896 only the bear market that started in 1929 has produced a larger slump.

The performance chart obtained from the Wall Street Journal Online shows how different global markets performed during the past week.

The five stages of investor behavior during bear markets can be classified as:

1. Denial:
• Example - "I feel fine."; "This can't be happening, not to me!,"
2. Anger:
• Example - "Why me? It's not fair!"; "How can this happen to me!"; "Who is to blame?"
3. Bargaining:
• Example - "Just let me live to see my children graduate."; "I'll do anything for a few more years."; "I will give my life savings if..."
4. Depression:
• Example - "I'm so sad, why bother with anything?"; "I'm going to die . . . What's the point?"; "I miss my loved one, why go on?"
5. Acceptance:
• Example - "It's going to be okay."; "I can handle it with change"; "I can't fight it, I may as well prepare for it."

Kübler-Ross originally applied these stages to people suffering from terminal illness, and later to any form of catastrophic personal loss (job, income, freedom). This may also include significant life events such as the death of a loved one, divorce, drug addiction, or an infertility diagnosis. Kübler-Ross also claimed these steps do not necessarily come in the order noted above, nor are all steps experienced by all patients, though she stated a person will always experience at least two.

Today, the spoiled brats, with Obama in the lead, are starting to realize reality does actually bite, and that no matter how much one attempts to change it, nothing will make it go away.

This is being accomplished by continued and persistent weakness in the stock market despite growing interference by the bureaucracy, people are now beginning to give up the ghost on their fantasies with respect to the economy, their wealth, and the future.

And make no mistake about it; this will make the mob angry as they see their wealth vaporized. They will be out for blood, with the complacency presently gripping the collective psyche increasingly shattered as more and more people begin to realize their futures do not look so bright anymore.

And this is why gold is not giving up its gains, because when angered, people will finally act, taking their money out of the stock market in attempting to secure what is left. Gold, of course, is a natural alternative in this respect.

Entire Industries are Vanishing…

For decades, the government has reacted to downturns by handing out temporary unemployment insurance checks, relying upon the resumption of economic growth to restore the jobs lost. This time, the government needs to place a greater emphasis on retraining workers for other careers, these economists say.

As government data revealed that 651,000 more jobs disappeared in February, a sense took hold that growing joblessness may reflect a wrenching restructuring of the American economy.

The unemployment rate surged to 8.1 percent, from 7.6 percent in January, its highest level in a quarter-century. In key industries — manufacturing, financial services and retail — layoffs have accelerated so quickly in recent months as to suggest that many companies are abandoning whole areas of business.

“These jobs aren’t coming back,” said John E. Silvia, chief economist at Wachovia in Charlotte, N.C. “A lot of production either isn’t going to happen at all, or it’s going to happen somewhere other than the United States. There are going to be fewer stores, fewer factories, and fewer financial services operations. Firms are making strategic decisions that they don’t want to be in their businesses.”

This dynamic has proved true in past recessions as well, with fading industries pushed to the brink during downturns before others emerged to create jobs when economic growth inevitably resumed. But with job losses so enormous over such a short period of time, some economists argue that the latest crisis challenges the traditional American response to hard times.

The grim scorecard of contraction in the American workplace released by the Labor Department on Friday largely destroyed what hopes remained for an economic recovery in the first half of this year, and it added to a growing sense that 2009 is probably a lost cause.

Most economists now assume American fortunes cannot improve before the last months of the year, as the Obama administration’s $787 billion emergency spending program begins to wash through the economy.

“The current pace of decline is breathtaking,” said Robert Barbera, chief economist at the research and trading firm ITG. “We are now falling at a near record rate in the postwar period and there’s been no change in the violent downward trajectory.”

The monthly snapshot of the national employment picture revealed an even bleaker picture as the government revised upward the job losses in December and January. The economy has shed at least 650,000 jobs for three straight months, the worst decline in percentage terms over that length of time since 1975.

Since the recession began, the economy has eliminated a net total of roughly 4.4 million jobs, with more than half of those positions — some 2.6 million — disappearing in the last four months alone.

This rapid deterioration has prompted talk that some industries are being partly dismantled.

Car Sales are plummeting…..

American car sales have dropped to an annual pace of nine million, from some 17 million in 2007. Even if sales increase considerably, that is likely to leave a lot of unneeded auto factories.

“The people who do what I do in the Detroit area are a dime a dozen,” said Kim Allgeyer, 46, a machine toolmaker in Westland, Mich., who was laid off in January from a company that makes assembly lines for the automakers. Unable to find another full-time job, he is subsisting on day labor and one-week stints for contractors. “Who’s going to put me to work?” he asked. “Where’s the work at? It’s just a great big black hole.”

Financial Services jobs are disappearing…

Much the same can be said for financial services, which gave up 44,000 jobs in February. During the housing boom, banks hired tens of thousands of well-compensated traders, analysts and marketers to sell mortgage-backed securities and other investments. That industry is unlikely to return to its former shape.

Retailers are struggling mightily…

Retailers are shuttering stores as the era of easy money fueled by rising house prices and abundant credit gives way to a period in which millions of households are forced to confine their spending to their paychecks. The economy lost 39,500 retail jobs in February, and has eliminated more than 500,000 in the last year.

Secondary Impacts are now coming on …

Transportation and warehousing lost 49,000 jobs in February. Employment services shrank by 88,000 jobs. Hotels and restaurants lost 32,000 jobs. Health care remained a rare bright spot, adding 30,000 jobs.

Want to save money? Sell your house. Move to Detroit. The median house in the Motor City sold for $7,500 in December.

Put away your Graham books, Buffett quotes and momentum trading advisors etc....In case you missed it, Buffett is in trouble and Graham lost 70% of his money during the Great Depression.

It is simple: people do not trust Obama, the FED, SEC and the markets. Nor should they given all the information unloaded in the last year. Obama and Co, likely only care about re-election, people will likely forget what is happening now. So Obama and Co are "swinging for the fenses", a 1 trillion++ "bail out" to their supporters.

Jim Rogers, the investor who had co-founded the Quantum Fund with George Soros, on Tuesday said U.S. stocks have yet to hit their bottom in this bear market, saying there could be no lasting rally until the economy recovers.

Rogers said he is unsure where to invest, although he likely will sell the U.S. dollar -- which he called "terribly flawed" -- and buy commodities. He was one of the earliest investors to predict the boom in commodities in recent years,

He told Reuters that efforts to pull the economy out of a steep downturn will not drive a lasting recovery because the government is propping up failing businesses and not allowing them to go bankrupt.

"None of which does much for the economy down the road. It's trying to postpone some pain we're going to have to take," he said in an interview from Singapore, where he lives.

Rogers said Japan tried fiscal stimulus to no avail, while countries that bit the bullet --such as Mexico after the peso crisis and Sweden after its bank crisis, both in the 1990s -- bounced back and did not prolong an economic morass.

U.S. stocks may rally because of the enormous amount of money the government is pumping into the U.S. economy, but "it's not going to last," Rogers said.

"I don't think the bottom is here, maybe 'a' bottom, but not 'the' bottom. The economy is going to get worse. You can't have a good stock market without a good economy," he said.

Rogers, who has railed at U.S. government efforts to stabilize the financial sector, said there will be a currency crisis in 2009 or 2010 that will "cause all sorts of turmoil and opportunities and losses."

"I want to get out of the U.S. dollar sometime this year, at least I plan to, because it's a terribly flawed currency," he said.

Meanwhile, Rogers is pondering his next investment decision.

"I don't know where I'm going to wind up putting my money. But at the moment I'm doing nothing but watching," he said. "I may just have to wind up putting it all in commodities because commodities are the only thing (whose) fundamentals are being enhanced."

Rogers rose to fame after co-founding the now-closed Quantum Fund in 1970. The fund returned 4,200 percent over that decade, compared with a 50 percent gain in the S&P 500 index.

American International Group should be allowed to go bankrupt because keeping it and other sick financials alive on government support risks ruining the US economy, legendary investor Jim Rogers told CNBC Tuesday.

AIG [AIG 0.451 0.031 (+7.38%) ], whose $61.66 billion fourth-quarter loss was the largest ever for a US company, received $30 billion more in government funds Monday. The insurer's financial health hasn't improved despite getting as much as $150 billion from the government last year.

"Suppose AIG goes bankrupt, it is better that AIG goes bankrupt and we have a horrible two or three years than that the whole US goes bankrupt," Rogers said. "AIG has trillions of dollars of obligations, let them fail, let the courts sort it out and start over. Otherwise we'll never start over."

On Monday, CEO Edward Liddy told CNBC that the insurer is far more stable and secure than it was last fall but acknowledged that it was "difficult to say" if AIG will need even more money from the government in the future.

Bailing out the banks is going to increase the debt spiral and finally cause the destruction of the world's biggest economy, Rogers said.

"I think it's astonishing, they're ruining the US economy, they're ruining the US government, they're ruining the US central bank and they're ruining the US dollar," he said.

"You are watching something in front of our eyes, very historically, which is basically the destruction of New York as a financial center and the destruction of America as the world's most powerful country."