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Indian Giver


Turtle soup!


Indians scattered
On dawn's highway bleeding
Ghosts crowd the young child's
Fragile egg-shell mind

(The Doors)

The early quiver is sending a shiver through the once brazen bulls (who are crying a river). We know yesterday's close was fugly and potentially trapped the imminent breakout crowd. Between that, the nasty morning breadth, Japanese terror alert and multiple sevens for sale in ETF-land and, well, the bears seem to have caught the bovine in a nap of their own. Let's take some quick vibes in the 'Ville.

As mentioned above, the internals were the first thing that jumped out this morning and they continue to deteriorate (3:1 negative). We know that ugly (strong) closes typically require a probe lower (higher) and this particular latex flex broke our first support (Friday's lows). While it's early (and it's expiration), it's worth noting that the NDX and Red SOX are now trading below their 50-day moving averages. S&P 1120-1125/NDX 1450-1460 are the next downside levels to monitor for those of you keeping score at home.

I've been watching Citigroup (C:NYSE) like a hawk as it's one of the single most important stocks in the marketplace. There's potential dandruff in the name (see it) and for purposes of today's tape, I'm watching it as a major market tell. Other issues with issues include Cisco (CSCO:NASD) (trades heavy) and the semicaps (sentiment proxy) while the internets, Microsoft (MSFT:NASD) and General Electric (GE:NYSE) are (thus far) hanging tough. That's what's happenin' with equities, Re-Run, but there's a much bigger picture developing.

Asset classes around the world seem to be simultaneously on the move. Gold is getting hammered (down $6), the dollar is starting to find its legs, Europe is takin' a spankin', crude reversed lower, bonds are getting hammered and the emerging markets are under pressure again. That's coinciding with a heavy stock tape and if (big if) these are trends rather than aberrations, there is still plenty of room to move.

With that said, this is still a critical juncture in many different ways. Longs are surely still long (and trapped IF we don't rally) as they've been conditioned to buy all the dips. If the third or forth dip doesn't hold, it'll start to shift the psychology that has motivated the momentum. Too early to make that call? Perhaps--this could be the head fake before the upside jail break....but I don't think so.

Stay tight and define your risk, Minyans, as we've got a handful of hours before our requisite two day rest. Let's get our groove on now so we can turn it off then. And think positive, cookie--it all starts within.

I'll be back.

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