Monday, April 20 After Market Close

With the exception of the MACD, all of the indicators went bearish indicating a market turn-around or correction is in process. The market indicators show an enter short position. But caution is warranted as one down day does not make a market and we have some important earnings announcements tomorrow morning. If earnings come in unfavorable, then the market should continue the downleg.

If the S&P breaks below 815, then I expect the correction to initially go to 780 on the S&P. If the earnings news is favorable and the market rallies, then this will create uncertainty about depth of the turn-around and may just be a mild correction. The VIX, now at 39, will need to go above 45 for a significant downleg to continue.

Among other bad financial news, what moved the markets today was a leak of the financials "stress test." According to "The Market Ticker," the following article Treasury: Caught Lying Again talks about the poor conditions of our major banks:

The Turner Radio Network has obtained "stress test" results for the top 19 Banks in the USA.
....
1) Of the top nineteen (19) banks in the nation, sixteen (16) are already technically insolvent.

2) Of the 16 banks that are already technically insolvent, not even one can withstand any disruption of cash flow at all or any further deterioration in non-paying loans.

3) If any two of the 16 insolvent banks go under, they will totally wipe out all remaining FDIC insurance funding.

4) Of the top 19 banks in the nation, the top five (5) largest banks are under capitalized so dangerously, there is serious doubt about their ability to continue as ongoing businesses.

He then goes on to list things that we know to be factual, including derivatives exposure (mostly in interest-rate swaps and similar.)

This is particularly damning news and I can see why the Obama Administration is having much debate about how to release the data. As the financials go, so goes the stock market.

As I do more research this evening, I will have some pre-open market comments tomorrow morning (Tuesday). If the research supports my conclusions, I anticipate I will be entering the market short tomorrow some time after 10:30 AM EDT.