Clock Ticking for the Fed

Two weeks ago the Fed refused to help Lehman Brothers, leaving the clock tick for the agonizing old institution during what might have been an endless weekend. The Fed then realized the mistake and is now asking the Congress to help. But the Congress doesn’t seem to be willing to collaborate unconditionally and rush things out. Paulson is urging them to act immediately because he knows that credit is growing exponentially scarse with each second. The clock is now ticking for the Fed. Ironic, no?

Ok, charts. SPY:

MACD down, and we’re back below the three DMA’s. There might be a little bounce up, but nothing to be worried about so far. Since last week I have puts, and I saw my profits go from almost 200% back to 10%, but at no moment I saw a loss. I’m constantly managing profit. So far so good. In the VIX you can also see that we might have a little bounce up:

We are heading to the resistance line and, as soon as we breach it, we will probably see a huge sell off. The dotted trendline held precisely and MACD is hugely up: momentum in negative sentiment is increasing. This is also evidenced in Treasuries: the “ultimate safe haven.” Flow to government notes is increasing.

And last, I want to show my next window for the end of this huge correction:

Two things here. First, notice that I’m using mostly the “even” series. This makes me feel a little uncomfortable since the “odd” series was producing quite reliable and precise turning points. Second, notice that the window is a little wider: the reversal date might happen during a period of 4 days, between Monday and Thursday next week. And notice also that I use an element from the “odd” series to support the window.

A curiosity. There’s an old jewish say, something like: “Buy on Rosh Hashaná, sell on Yom Kippur.” Well, 09/29 is Rosh Hashaná.