To date, this market has been visited by one ghost; the Ghost of Christmas Past. The Ghost's of Christmas Present and Future are approaching. And Just like Ebenezer, I am scared.
The powers that be, from the Fed to the ECB, to Macy's for that matter, would love for the Ghost's of Christmas Present and Future to remain there frozen in time. And just like Ebenezer, they are bound to follow the Spirit and witness the obvious truths. These are hard times. Strike that. These are
dangerously hard times.
Let's not fool ourselves, the action in the futures market tonight and what's coming down the pike tomorrow morning was going to happen regardless of what was done in Congress. All Congress is doing is expediting it's delivery. For once they deliver. The irony is everywhere...
For those of you who were depending on this bailout to deliver a Christmas rally (they run the gamete of bulls and bears alike), shame on you. Does this feel and smell like a normal market? Christmas (curse tense), look what happened after the 700 billion dollar bailout was approved, the market's didn't exactly wake up to the upside and turn the corner, they imploded! Keep things simple. If you are not terrified at how this market has performed after receiving every hand-out imaginable, you need the phrase P O L L Y A N A (a synonym for Dennis Kneale?) tattooed to your forehead.
This is a Class-5 hurricane, throwing sandbags (the Fed, Congress, Interventionists) is inconsequential. The collective fear is the market's equivalent of Mother Nature. It will walk and romp where it wants. Follow the infrastructure in the charts, they show the
GuidePosts along the way.
I have been comparing the 1990-1991 Savings & Loan bear market as a navigation tool through the current bear. It isn't a perfect parallel, but the fact that it was driven by a severe banking crisis holds relevance to today. Think of it as a fender bender bear. The market we are currently experiencing is the highway collision bear. The dynamics and reflexes are similar, the severity of the collateral damage is worlds apart. The first two charts are of the two bear "financial accidents". Although the magnitudes of the declines are standard deviations away from one another, the trends are very similar. For clarity, you can see that the 1990 Bear carved out three separate lows over the fall crash cycle. The 1990 bear crash/liquidation cycle started almost two months earlier than the current crisis. Setting them on the same timeline, we will experience a third low next week or soon thereafter. To sound like a broken record, I have been following the gold/silver ratio as a barometer of risk appetite in this financial crisis. To further simplify, I have removed silver from the ratio and replaced it with the SPX. I then compared the two financial crises in this ratio. They trend with stunning similarity. You be the judge. 
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