The S&P hit the glass ceiling

As expected the S&P was unable to penetrate resistance at the 90 DMA at least on it's first attempt. Now the question is do we get a test of the lows, maybe even a very mild test and then off to the races again or are we seeing a dead cat bounce with more pain to come.

First off let me say the odds are stacked in favor of the bottom being in. No doubt about it. We are entering one of the most seasonally positive times of the year. We just came off some pretty severe breadth and sentiment extremes. We should be set up for a nice rally.

Here's my problem or problems I should say. First off if we were to make new highs then this would move the bull up to the second longest 4 year cycle in history. Second we obviously have the catalyst in place for the 4 year cycle low to happen with the credit crunch and subsequent damage to the financial sector. On top of that we can add the spike in oil that has always preceded or accompanied recession in the past. A bond market that is saying something ugly is coming. Widening credit spreads between T-bills and the 2 trillion dollar commercial paper markets. BTW I have trouble seeing the Fed cutting especially 50 if the market is rallying big into Dec. 11th. And the biggie. Almost everyone thinks the bull market is back. Can it really be that easy? The biggest financial crisis in years and all we get is a meager 10% correction and then it's back to the races with a 5% move in 4 days.

First off I don't know about you but the markets have never been that easy for me. Another thing I don't recall is bull markets moving straight up like a rocket. Don't bull markets climb a wall of worry? I'll tell you what does jump straight up and that is oversold rallies in bear markets. That's how the bear keeps everyone on board for the full trip down. You don't believe me? Just look at the 2000-2002 period. Heck just look at the BKX for that matter. It's obviously in a bear market and we continually see these big rallies that ultimately fail as investors continue to try and pick the bottom. BTW everyone seems to be calling the bottom in the banking sector also.

Some of the biggest one day and one week rallies in history occurred right in the middle of one of the nastiest bear markets.

Now let me state again the odds are highly in favor that we've put in an intermediate bottom. Let's just say I'm still a bit skeptical.