Before today’s announcement from the Feds at 2:15 pm there were people saying that another big rate cut will be just what the market needs to rally the bulls. Well, the Feds did cut again and they went with a 50 point cut and the rally lasted all of 45 minutes before it died. Even before the rally ended we could see that it was not going to hold. Watching the tape right after the announcement we saw that the buying was weaker than one would expect following a rate cut. But today’s rate cut in my view is just adding to the fears that our economy is very ill and the credit crisis is just getting worse.

When I look at the intraday charts from today I see that the rally was losing steam almost as soon as it left the gate. And then once it failed the selling volume picked up in intensity. On the Financial ETF (XLF) the down trend line held tightly and we failed to break resistance. There is still lots of economic news to be issued but today’s action tells me that we are still very likely to see further deterioration in the markets, perhaps even very significant deterioration.

Right now there are more concerns (again) over the bond insurers. Ambac (ABK) and MBIA (MBI) are scrambling to save their credit ratings and the companies themselves. Should either of these two companies lose their credit rating the implications will indeed be far reaching. As we have spoken of this many times before, these two companies are in danger of collapse. Today we learned that Moody’s or Standard and Poors "may" be very close to a decision on what they will do with the ratings of these companies and an announcement may be very close. Tonight, at 12:06am here in the United States MBIA released their earnings for the 4th quarter. Their 4th quarter results was a record loss of $2.3 Billion. EPS was -$3.30. In a desperate attempt by the company to draw attention away from their substantial losses the CEO made a long statement about how they feel they are well positioned now to maintain their credit rating with an added capital investment of $500 million from Warburg. We should note that $500 million is in our view like pissing on a 5 alarm fire, it would take hundreds of billions to shore up the bond insurer crisis. The CEO is desperately trying to make his company appear sound and well funded in order to maintain it’s ratings. This story has many chapters to go, but we hope the last chapter is not the story of a total collapse of our financial system.

Some charts from today. The financial sector (XLF) was unable to break resistance today, the trend line remains in tact at this time. The second chart is an intraday chart of the S&P (SPY).