Thursday Curtain Raiser

The bulls gave a so so account today by keeping major indices into the plus column by way of a .4% Dow gain, .3 Nasdaq gain and .5 SPX gain. Even a guy like Drudge is left wondering with his headline: "Rebound?" Technically it was a rebound, but it seemed perfunctory - perhaps the embodiement of a dead cat bounce.

So at least the market was able to bounce back a bit today, but the advantage is now squarely in the hands of the bears. Below is a chart of the Dow with an overlay of the Relative Strength Index. For the first time since last summer and spring RSI has fallen below 50 and this has not meant good things for the bulls...

In plain and simple english, bullish momentum has broken down. I'm going to stick with my forecast that we eventually see Dow 11.6K

While the Volatility Index ($VIX) fell 15% to 15.42, there was an urge to make bearish bets on the ETFs. Put buying on IWM (Russell iShares 2000) eclipsed call buying by a margin of 4 to 3. 4 to 3 sounds inocuous but thats over 400,000 puts traded today vs 300,000 calls. Likewise, SPY puts traded at ratio of 315k to 175k; and DIA puts eclipsed calls by a margin of 49k to 27k. Of course, if that kind of thing keeps up, it will be a great contrary indicator. But now it seems indicative of folks who gotten some 'religion' and are buying themselves some protection along with some new bearish speculative froth. The put to call ratio on the IWN has averaged 3 recently, now it's at 4.87.

Russell 2k, by the way, among the big indexes that broke below the 50 day m oving average during the past week. But even more important on the Rut is the 76 area. If we break that double bottom area, skids are greased IMO for a run down to the 200 day moving average.

There will be plenty o' data and info to sift through tomorrow: Jobless Claims, Challenger Job-Cut Report, Personal Income and Outlays, Construction Spending, ISM Manufacturing Index, EIA Natural Gas Report, Chain Store Sales, Motor Vehicle Sales, Money Supply.