Remember this one...
Well, fun and games in the "Which Side is Up?" world we live in is moving to the world's sixth largest economy: California.
Here's what the spokesman for the state's Treasurer had to say about Standard & Poor's warning Tuesday that, California's credit rating, already the lowest of the 50 states, may be cut again...
"S&P raises undue alarm about the potential for missed bond payments," he said. "There is zero chance of that happening."
Well, you know what they say... Never say never. This seems rather relevant, too, considering Controller John Chiang has warned that the state could run short of cash beginning July 28, just one month into fiscal 2010.
Now, you may have heard politics is a dirty business. No wonder, then, White House Press Secretary Robert Gibbs had this to say in response to the California fiscal situation...
"We'll continue to monitor the challenges that they have, but this budgetary problem unfortunately is one that they're going to have to solve."
"Unfortunately," too, last year's game of financial chicken evidently has a great deal of life remaining...
I am bringing this to your attention because I suspect the calamity phase of the still unfolding bear market might have begun. It's possible there will be no final leg of buoyancy such as I have been anticipating.
Right now, I am wrestling with the fact that some underlying technical measures have moved to a position where one might expect weakness to soon abate, possibly signaling imminent recovery coinciding with the market regaining its legs.
To whit, both the NYSE and NASDAQ McClellan Oscillators are reaching levels that, relatively speaking are "oversold." In addition yesterday and today saw more Put option volume than Call option volume on the CBOE...
Now, one thing of note here is the behavior of the CBOE Put/Call Ratio at market tops. You see this sort of divergence both in bull and bear markets. It suggests waning speculative fervor behind a market advance. The most recent instance of this has been in evidence for over the past month and a half.
Then, yesterday and today a bit of the fear (shown by increased Put buying) — noted absent on Monday when major indexes were throttled 2-3% — suddenly has developed...
Is this signaling the nearing end to a pause that refreshes, setting up continuation of the market's advance off March '09 bottom? Or is it, contrarily, a first-sign of pending trouble — smart money taking a bearish position?
I suspect it's the latter, and that within a matter of days we could know for sure...
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