The Shock Waves Have Begun

We continued to trade in this 4th wave pattern last week with some wild swings. (Drifting lower until Wed, hitting the bottom of the channel Thursday morning, with a strong rally at the end of the day. Any excitment was squashed Friday before close.)

Anyone who is hoping for a reversal here had their dreams shattered Friday as more and more shock waves hit the news:

Retail sales plunge 2.8% (with more to come - Abercrombie and Fitch expecting same store sales to crash 28%)

Nokia cuts industry sales targets - will have ripple effects throughout the industry with suppliers like Qualcom, Texas Instruments and Broadcom to name a few beginning to feel the pain.

Sun Microsystems cutting 6,000 jobs

Citicorp cuts 10,000 jobs - and to help finances have raised interest rates on credit cards by 3%.

It amazes me that the government on one hand is helping bail out banks who are lowering mortgage rates and offering longer terms to those holding risky mortgages, but letting them screw their customers on the other hand by raising interest rates on credit cards. Is it just me or do those handfull of banks seem to be getting the best deal in town.

And the poor NYSE has been forced to lower their standards in order to keep business. They have decided to ban the penny stock restriction. Otherwise they would be loosing the likes of Fannie Mae and Freedie Mac, and for us Canadians gasp Northern Telecom which closed at $0.56 on Friday. (Some were laughing at me for suggesting shorting Thurday at $0.75 - not a bad return for a days work!!!)

The next big decision will be what to do with the auto sector - bailout or bankruptcy. Suffice it to say they may be joining the penny stock status soon!!!

As far as trading, the Alligator is sleeping and it is still best to stand aside. Personally continue to straddle with some short positions as I expect new lows before the dust settles. (The shock waves have only just begun)