Downside targets met bear case closed (for now) !

So much for Jeremy Siegel's book, Stocks for the long run. Anyone who invested in S&P in 1997 and slept on it all these years is under water now. And so much for the cheer leading squad on CNBC !

I had unequivocally predicted that the market was setting up for a crash this week. My immediate downside targets of S&P 935 and Dow 8500 have been met. I was naive in thinking that expiration manipulation will buy one more week for the market but bears were in a hurry to bury the bulls and write the epitaph.

The coordinated global rate cut campaign could only delay the pain by one day. The market participants have finally called their bluff. They have realised that the system was rigged right from the beginning. Once this realisation dawned, it didn't take long for this house of cards to crumble. I wonder if powers to be have any other tools left in their tool kit to prevent this financial meltdown.

I am watching the next line in sand at S&P 770 and Dow 7200 now. These are the 2002 bear market lows. The futures are down big as I am typing this. Looking at the downside momentum these targets can very well be achieved in a day or two. Am I betting on it? No, because the momentum can reverse anytime now.

I have no doubt that we will eventually take out the 2002 lows. The unknown is whether in this leg or later? If I have to hazard a guess, I think that bears will visit these levels on a later date.

I visit a lot of blogs and amused to see that even the staunchest of bears are eager to declare that the bottom is in. People just are afraid to miss the ride up as if it would just last one full day. When the bottom finally comes, bottom fishers won't even notice that because having burnt so many times by the false starts, they wouldn't even be watching the market. They would be saying "to heck with it". When people reach that state of apathy, I would be more comfortable in declaring that a bottom is in. Till then, the only game in town is to short every rally.

I am positive that we will get one big day, at least + 700-800 Dow points, between now and next Thursday. But this is a market gripped by fear so be careful out there. No need to try and catch every move in the market.