peter pumkinheads death by a 1000 cuts tuesday, page-174

In my view, for 3250 to ever be reached, two things must happen and in tandem:

1) US double dips into recession, and

2) The sov. financial crisis truly spills into Spain and Italy.

For me. both look unlikely based on current info known.

I believe the erratic behaviour is more of a crisis in confidence in American Politics. Added to this is the known possibility that Europe's debt woes could worsen.

It's that simple IMO. i.e if you believe neither of the above will happen, perhaps wait for the market to be oversold by your charts or whatever you're using to decie on an entry point, and go long. If you believe both will happen, or either will sig. deteriorate, then wait for the market to over stretch, then short, and keep on shorting it.

I don't believe a chart will tell you too much, at all about the final outcome.

May be best to basically decide on the above and play the indices based on your decision, **assuming all remains equal**. It appears any QE3 will have little effect on the fundamentals - the U.S now will, at least for the next two years, have a GDP of 1.5 - 2% with high unemployment with very low interest rates. This is now the general consensus. What the markets needs to see is solid decisive action - confidence from the Whitehouse, whether it be some type of QE3 or not.

In any case, the real worry is Europe, and I'd be keeping any eye out for news flow regarding this - particularly if a banking crisis becomes evident. This is the show stopper.

That being said, I believe the market was heavily oversold this morning and last night's drop outside of Asia today was panic driven. The market may well be still oversold by another 500 pts on Wall St at 10800 odd, but I doubt this will come overnight - gradually it may recover. Could be up to 1000 pts by Christmas from here on the Dow. The U.S. is not going broke and it's improbable that they'll double dip. If China and India do not have a hard landing in the meantime, the S&P should do quite well from here in 11/12.

Just my thoughts.

I'm staying out atm. At 100pts + atm, I see little value either way.