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The Good News here is that not everything is as financially geared as some of these horse and buggy whip US Financials and Industrials… If everything was, the US market would be down 6-8% today...

With the XLF (Financials) getting smoked for another -8.5% day, and XLI (Industrials) down another -5%, these are the crosses of leverage that this fine country still has to bear… The New Reality remains this: in an environment where the cost of long term capital continues to rise as the access to it (without government regulation attached) declines, companies geared to those P&L factors lose relevance…

Underneath all of this, after the 11AM refresh of prices, I come out with SP500 support at 670. Yes, that would be a lower low, and yes, that would make Obama just as wrong as every American is in their 401k right now. Lower lows are bearish.

In a raging bear market like this, bounces are to be sold. Unfortunately, for me at least, I did not do enough of that yesterday. In preparation for the next bear market bounce, I have the first line of SP500 resistance at 730 (dotted red line in the chart below).

Keith R. McCullough
CEO & Chief Investment Officer