Investors and traders should place close attention to the articles we wrote Saturday and Sunday. The Saturday article clearly points out the dramatic change of the percentage of the market that was short 1 month ago to how many short positions are held today. That change clearly indicates that we can expect less buy orders coming from those who need to buy to cover their short positions. In addition, the Sunday article brings out the point that our financial system is still very fragile and not out of the woods yet. […]

The evidence is all around us as even many of the typical bulls were warning of a possible profit taking that never materialized. Let’s look at FNM for example a stock that was worth 60 cents a few months ago. Last month, FNM had 55.17 million shares shorted, or 5% of the total potential float. Less than 3 weeks later, it only has 156 thousand shares shorted, or about 0.14% of the float. Than we have BAC, last month Bank of America had 92.63 million shares shorted, or 5.5% of the total potential float. Less than 3 weeks later, it only has 229 thousand shares shorted, or about 0.13% of the float. Lastly, let’s look at AIG, last month it had 24.64 million shares shorted, or 19% of the total potential float. Less than 3 weeks later, it still had 24.15 million shares shorted, or about 18.7% of the float. But the last month, the stock has skyrocket over 400%. Let’s keep an eye on how many shares are still shorted next month. […]

But as bad as the unemployment number was, the FDIC report was much worst. Over 410 banks are currently in the danger zone of being closed down. FDIC estimates 2/3 of the banks are insolvent. More than half of the banks reported revenues. The FDIC’s revenue fell by 20% from 1 year ago. Great, this report will surely fuel the rumors of the world wide bank holiday. […]

“LAST MINUTE MESSAGE: Reliable word that Bank of America branch managers just received a letter or memo from the USFed instructing them to perhaps be ready for a one-week universal shut-down of the banking system, including access to checking accounts, savings accounts and credit cards. Reliable word has it that BofA bank branches received a shipment of signs last week, reading “We’re sorry, but due to circumstances beyond our control, we cannot be open at this time.”” […]

Today seems like a genuine positive day for the US stock market. The US dollar is getting stronger and moving opposite to its trend of late. Meaning that even though the dollar is up, the stock market is up pre market, and bonds are down. The only trend that’s slightly holding is that oil and other commodities are slightly down. […]