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Ten years ago today Bear Stearns was "bailed out" for $2.  It was really something surreal.  I did a lot of business with Bear Stearns as they had one of the best trading desks on the street.  The quality of sector traders was as good as it gets.  Many of the traders I spoke to everyday often 10 times a day were and still are my friends.  It was hard to be on the other side of the phone when hearing the fear and panic when it was all happening.  The week they went down 85% I have many memories.  Of course we remember Jim Cramer who was trying to assure people on his show "Mad Money" that Bear Stearns was fine and not to take your money out.  He's a bull in every market and he was flat out wrong.  It happens and I certainly have made some calls I'd like to take back.  Alan Schwartz the President was on CNBC saying they were fine too.  My Goldman Sachs derivative trader called me mid week and said "We no longer can trade Bear Stearns options or provide capital on any BSC trade."  Derivative traders tend to know a lot about liquidity and where the bodies are buried. That was a real red flag to me. 

On Thursday night, I went to the Bear Stearns HQ for an idea dinner that brought together a lot of hedge fund managers and traders.  It was hosted by my friend AC Morgan and it was usually a tech focused idea dinner.  It was held in the corporate board room that had a huge round table where everyone could see each other.  Nobody talked tech and they had several senior people from their credit division.  They tried to assure everyone it was the 5th inning of the credit crunch.  We discussed the risks in the system but continued to defend themselves with the balance sheet of Bear Stearns.  My friend Todd Harrison started to ask pointed questions, they defended themselves but it didn't hold up.  It was a very tense evening where everyone was concerned and a many scared of the unknown.  Bear Stearns HQ was an amazing building octagon shaped as I was told "It was done to satisfy the many egos who need a corner office."  When walking out, it reminded me of the scene in the Titanic at the end when all characters (who died) all were on the staircase.  The last part of the story is one of my friends who was a long time Bear Stearns trader who went to JP Morgan as global head of trading told me he had lunch with Ace Greenberg the Chairman of Bear Stearns (after Lehman blew up and went bankrupt) said Ace was able to laugh and say "Hey we ended up getting $10 bucks a share... not bad!!"

Those who went through the great financial crisis learned a lot, for some very painfully and for some found opportunity.  My firm found opportunity and were ahead of the down move.  Our firm had some of the most talented PM's, analysts, and traders who were all in sync.  I believe the work I did back then ahead is lining up again in a similar fashion.  More on financials then and now below.   Have a great weekend! 

Notable:

• US Markets - Holding in a tight range... for now
  
• European Markets - DAX still looks the best and Euro Stoxx 50 stable.  Still hesitant
  
• Asian Markets -  Japan, China, Hong Kong, India - Still risky
  
• Financials - Then and Now - Could we be seeing the same signals again?
  
• Bonds - Sentiment improving but no turn yet to convince me bond bounce is on
  
• DeMark Screens
  

SPX bullish sentiment is at 61%

SPY is holding the 50 day moving average and seems to have run out of any momentum.  Next week with the Fed will be a good tell

Nasdaq bullish sentiment is at 64%

QQQ also has stalled at recent 171 support.  

Europe continues to quietly stabilize with the Euro Stoxx 50 only 1.5% below the 50 day.  I'm not yet convinced this is a buy but am monitoring close

German DAX also is stabilizing and has an upside Countdown on day 7 of 13.  This is the best index in Europe.  If I was to be long one index it would be the DAX.  Below 12,075 and I'm out.

Natural Gas bullish sentiment is at 56% down from the recent high of 66%.  Sentiment seems to be holding in there for now.

Natural Gas Futures has seen inflection with some recent green Setup 9's.  I'm watching the 2.642 level as new support.  I still like Natural Gas as a long.  It's just not cooperating right now.

Nikkei Index still looks weak on day 10 of 13 with its downside Countdown.  Big support at 21,000.  

Shanghai Composite is on day 8 of 13 with its downside Countdown.  3,200 big support

FXI Hong Kong/China ETF is on day 6 of 13 with its downside Countdown

India's Nifty 50 Index is on day 10 of 13 with its downside Countdown and right at support

Bear Stearns dropped 85% in 5 days.  Risk comes at you fast.  

XLF from 2006 - 2009 daily had several upside exhaustion signals into early 2007 when the subprime issues came to light.  After a big drop things bounced but then started to lose support.  There were may rallies on the way down of over 10% which makes shorting so difficult.  

The weekly of XLF in early March 2007 had upside exhaustion in wave 5 and then it started to roll.  The wave 3 downside price objective was surpassed by 8 points but the wave 5 downside price objective was pretty spot on with both Combo and Sequential downside exhaustion signals in early March 2009.  

The monthly signals happened in 2006 and 2007 and my firm was already starting the short positions - early.   Currently it's achieved price objective of the 5th wave and has a green Setup 9

The daily chart from the past 6 months show a topping pattern with potential for a downside wave 3 price objective at 25.29.   The Trend Factor upside targets measured from the  February low (green lines) were pretty spot on.  

XLF weekly also shows achieving the 5th wave upside price objective and has recent upside Combo and Sequential AND green Setup exhaustion.

Broker Dealer's have surpassed their 5th wave monthly price objective and has a Combo 13 and is on month 11 of 13 with the red Sequential.  

Bond bullish sentiment is at 38% another recent new high.  

10 Year Bond Futures still hasn't convinced me of a turn

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