“The sea was angry that day, my friends!”

“The sea was angry that day, my friends – like an old man trying to send back soup in a deli.”

George Costanza

First off, please pay no attention to those who have been bearish since Noah and his ark! Whenever markets get hit, well…you know what they do.

After being bullish on TECH/INTERNET/NASDAQ/NDX and all that stuff for months, we told you on the weekend, right after June 9th that the action of June 9th was not subtle selling but a smack in the face selling. We told you we thought it marked a top in all those areas. We told you to expect some violent action after. We told you that ultimately, there would be more time and price. This Tuesday was gross. Yesterday got almost all of it back and today, right back down. This is the violent action we told you to expect that quite often marks important changes in direction.

Technically, we believe June 9th was the start of the “TECH WRECK” we are now just starting to experience. It occurs because how long it has gone without a correction but also because it became a one-sided trade. We have taken pains to tell you how narrow recent rallies have been creating the one-sided trade.

As usual, we have no idea how long it lasts or how far it goes but best guess this is not the end of the trouble in these areas…but the beginning. AND JUST WATCH THE SEMICONDUCTORS. They led up and are now on the lead to the downside. Bearish phases do happen.

The last question is whether any further downside will affect other areas. So far, other areas have not been hit too hard. BUT…we don’t think we have ever seen a market that does too well when TECHNOLOGY corrects in a big way. Remember, this is a process and not an event. We suspect more violent moves but in the end and to repeat, we suspect there is more time and price to come. There is huge support on the NASDAQ at 5936-5996, the last breakout and the last hold of support. We are in hopes it does not get breached. A move back there would be about a 6-7% correction. Not sure that will do the trick but we are open to anything. Central banks are still alive.

Gary Kaltbaum