Enough Uncertainty?

-Good Morning-

The futures are taking a beating like the Gulf. Overseas markets have also been hurt in anticipation of the aftermath of Katrina. Crude Oil hit almost $71 per barrel premarket due to the expected 1.4million barrel per day disruption. The truth is that nobody will know the tangible impact for at least a few days.

The stock market, which has been in a downtrend for several weeks, is showing some signs of panic. The key question traders must ask themselves, "Is the level of uncertainty high enough to create a tradable rally?" There is nothing the market abhors more than uncertainty. However, in order to truly form a decent bottom we need to see more than just fear of the unknown. Positive divergences in the market, key support levels, more Bearish sentiment, and better seasonality, would all be ingredients necessary in conjunction with this uncertainty to form a tradable rally. Currently, we do not see the proper mix. Therefore, although the market may put in another oversold bounce, we would not expect it to have legs. Perhaps after Labor Day, when traders are back in the saddle and Crude Oil defiantly has not pulled back from this spike will we get the better bottom for us to deploy our cash.

The decline in the market has been too orderly, even this morning. Will it take another hurricane threat to exasperate the situation? Hopefully not. We choose to maintain our defensive posture and fight another day.

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