I’m thinking that the election results will offer the catalyst for that pullback.

Also, Hank and Ben (and Bush) may decide that, with the election out of the way, they can actually go an entire month without a bailout or backstop.

People that shouldn’t be in the market will have to sell until only people that can afford to be in the market are left.

http://www.nypost.com/seven/10312008/news/regionalnews/dr__doom_does_dc_136165.htm

SSO has tracked the SPX pretty well the last couple of days. Same for UWM.

May be that the lower volatility is making tracking easier.

And guys, remember that for all the claims that the Market reflects the economy, it doesn’t do so in a timely manner. We all (or almost all) knew that things were going down the toilet a long time before the market really tanked. So, just because things are bad and are going to get worse, that does not mean that the market will tank immediately. Joe Six Pack investor needs to figure it out first. That could take awhile if he’s as stupid as Palin thinks he is.

***** added for emphasis

US annualized econ growth rate at record low-ECRI
Fri Oct 31, 2008 10:30am EDT

NEW YORK, Oct 31 (Reuters) – A measure of future economic growth in the United States slid to a seven-year low and its annualized growth rate dived to its lowest reading on record in nearly 60 years of data, a research group said on Friday.
The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index (WLI) fell to 112.9 in the week to Oct. 24 from 114.0 in the previous period.
It now stands at its lowest level since Oct. 26, 2001, when it was 112.7.
*****The index’s annualized growth rate dipped to negative 21.9 percent from minus 19.3 percent, its lowest going back to January 1949, when the index was first published, according to ECRI data.
“With WLI growth plummeting to the lowest reading registered in its six-decade history, the outlook for the economy has darkened dramatically.” said Lakshman Achuthan, managing director at ECRI.*****
…
http://www.reuters.com/article/marketsNews/idUSNAT00452820081031

The 985 level is the exact midpoint of the 23.6/38.2% retrace of a larger Wave 3 on the model I’m going with…it’s an interesting level to reverse from and go much lower. However, of the ABC pattern that began on October 10th, I cannot see a clean ‘finishing’ pattern for the C leg. I would have loved for the SP500 to run to 1000 ish today….it would have been a clean pattern in my book and I could have sold the SP500 with reckless abandon….but the whole price action today was ‘odd’ for me. So, I will have to sit on the sidelines till the market tells me something new.

On a psychological/sentiment note…there were plenty of ‘relieved’ happy looking people on CNBC today….and the VIX has come way off….bottom callers all around the place right now….my gut says sell the piss out of this thing next week…but my technical side says wait to see the action.

Regards,

AT

Can I see a show of hands that thinks this is a normal year?

Thought so.

Only problem is, this year has been sufficiently perverse as to leave open the possibility of it ending either up 20% or down 40% … or any other randomly selected number.

We have a potential election honeymoon of uncertain length, the possibility that the consumer will surprise everyone and obliterate their remaining credit during capitulation Thanksgiving sales by merchants, and even the exceedingly unlikely possibility that the new administration will roll out an outstandingly competent cabinet and a credible plan to pull the nation out of the fiscal crash dive it is currently in.

There is also the possibility (probability) that the malls will be empty over the Thanksgiving weekend, that an increasing cascade of employers will announce a series of ever-larger layoffs, and that we will take some more turns around the deflationary whirlpool, with the economy shrinking more and more, until the national economic toilet is clogged with the turds of banks, insurers, and major corporations pumped so full of Fed hot air that they just won’t flush.

Of course, the maximum perversity would be achieved by having the market do silly feints up and down from here, and close out the year with a nominal 11% gain.