The hammer pattern so far has held. It has too or the pattern is bunk. I have started legging in again as a result and will do more so if a rally unfolds. They have pressed and pressed and you have to wonder, just how much more is there to be sold at these levels. I'm not bullish, but I am realistic and realism says that you definitely shouldn't be shorting here, but buying instead ... at least for a trade with a lower level of defined risk once more.

I don't know if folks realize just how close we are here to a real melt ... a melt like none of us have ever seen. I'm not here to spread fear but folks, when the Fed has to start buying commercial paper because corporations can no longer get short term funding to meet payrolls and pay short term liabilities ... there's a real issue out there.

More and more it is difficult to make any utterances on the chart of the day with regard to a good buy or sell setup because the patterns are being overwhelmed by sheer emotion. There are a few charts that continue to beckon for ones attention though. This one is in the oil patch.

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After a day where down almost 400 on the DJIA is considered a relief, what's next? Who will be the last man standing?

We saw a huge move off the lows yesterday on exhaustion associated with the dive as well as rumors of a coordinated set of interventions around the world. Last night, Austrailia slashed its lending rate by a full percentage point but that was it on that front ... so far.

This morning, Europe has a weak bounce and there's talk of the Fed moving into the business now of making loans in the commercial paper market now. That's a key problem area since it threatens to cause one or more companies to miss payments and even payroll. We are so close to the edge here folks that it would be hillarious if it weren't so serious. No one, and I mean zero, wants to lend money anymore as they are afraid it will not come back.

Hit 1777 (1780 to 1770 was projected) for what should hold as a long term wave 4 low. If so, the bear market is over as of today.

It's always useful to try and find a precedent to compare to when viewing current events. Over the past year I have used the 70's comparison but I'm starting to believe that template is not valid. The depression in commodity prices that has occurred over the past few months (if it continues or does not recover and that appears to be what's happening now) is quite different here than what occurred in the 70's. I was reading a piece this weekend that offers a better comparison - The Panic of 1873. There are a lot of parallels there and things to be learned as a result.

Another model that may be of interest is the parallel with the Japan stagnation that has been in process since 1989 ... almost 20 years now. That model shows that tampering with the market through fiscal stimulus and arbitrary monetary targets has done little to rid the country of the economic malaise that it still is fighting.

Now that we are entering year 2 of our own problems, how will it play out? Will it be a crash and burn or a slow bleed? So far, we are taking the steps needed to make it a slow bleed.