No Intraday Rallies, Market Closes At Its Lows

Nice day in the market, huh? The market really never lifted, and closed at its lows.

After hours, Intel (INTC) reported disappointing earnings, and the stock was down a lot. That should make for a weak open tomorrow morning, which will surely mean that we break below the August lows.

This marks a change in character for the market, which has not made a lower low in the charts for a few years. I have been lightening up and getting more defensive because of this possibility.

I have seen more and more indicators this week that lead me to raise the odds of recession materially. But just because we may have a mild recession, does not mean we will have a down year for stocks. I think stocks will begin to discount a reaccelertion of growth in 2009 around mid-year or so, and finish the year strong.

Fear was palpable today, with the CBOE put/call closing at 1.25 and the ARMS Index hitting 4.37 at the close. Those are extreme levels, and I think the rubberband is getting stretched extremely tight.

I am hearing rumors that the Fed might step in and cut this week. I have little faith in this Fed, but if it is true, this market would fly.

Rest up, tomorrow should be another fun day.