Must be an (Intermediate) Bottom

Technically, we have a very easy set up – Monday on the lows we neared S&P 1100 – yesterday we essentially tested that level. So if 1100 (slightly higher) holds we have the makings of a potential double bottom set up and an intermediate bottom. If it breaks we have another leg down – but we do have a clear line in the sand.

On the sentiment side I have not seen it this bad since 2002 – maybe it is worse now, I can’t recall. Aside from that, the 2 biggest bulls on CNBC who have denied recession for the past year and a half finally threw in the towel and acknowledge we are going to recession this morning – Brian Wesbury and Jack Bouroudjian . Congrats guys – denial finally turns into acceptance – a little late (S&P down nearly 25% this year).

I’ve never seen Cramer so negative in 10+ years.

Buffet says if we don’t get the mother of all bailouts passed we are at Economic Pearl Harbor

French Prime Minister says the world is on the edge of abyss

French Prime Minister Francois Fillon said the world stood on the "edge of the abyss," gripped by a global financial crisis now threatening industry, trade and jobs worldwide. "The world is on the edge of the abyss because of an irresponsible system," Fillon said, alluding to widespread anger over past lax regulation of financial markets and excessive lending. (US investment bankers respond "We’ll take that as a compliment")
Around the world, calls came for the House to pass the bailout bill, which would allow the Treasury to buy illiquid debt from U.S. banks to stem a spreading crisis..

The mother of all bailouts bill now looks like it will pass based on Buffet pressure – Paulson can now set a fake price that is too high for all these toxic assets and then the banks can "mark to market", the market being an arbitrary price the former head of Goldman Sachs will set (oh sure some will be auction as well I suppose).

The Federal Reserve is dropping money out of helicopters like no time in history.

European leaders are meeting Saturday on the financial crisis (i.e. people are finally starting to "get it" – how bad a crisis we truly face).

French Prime Minister Francois Fillon, whose country is hosting an emergency summit with Italian, British and German leaders on Saturday, said only collective action could solve the financial crisis. He said he would not rule out any solution to stop any bank failing

A very bad labor report is brushed off by the market

This type of action wants to make one bullish at least in the short run. And with the technical set up, it is a clear set up – north of 1100 (we hold on the S&P and form a double bottom) we can be bullish for a while; if 1100 is broken we have to expect another leg down.

But we have multiple catalysts now at least for a short term move up – don’t be surprised by some global central bank moves post House vote and/or Sunday night or early next week.