The markets have been gyrating up and down wildly this week… and in the end they have moved very little. For a technical analyst like myself this week has been akin to watching the EKG of a patient in ventricular fibrillation.

Massive up and massive down moves in the span of minutes, overnight futures market just as volatile as normal trading hours, and sporadic volume make for a market that is on the brink of a cardiac arrest.

If you are new to trading, or the stock market in general than you are witnessing events that are remarkable. What we are watching is a market that is trying with all its might to stay alive. But the forces driving it apart continue to build with each passing day.

Recently we had more than the average number of “perma bulls’ who swear that the bear market is dead and everything is up from here. Over the past 14 months whenever the number of people start calling a “new bull market” has increased it has every time led to a significant down turn in the market. Will this time be any different? The market will settle that bet. But from my view the market and the economy are still deteriorating at the seams. 

The extraordinary swings taking place over the past week are signs of a major event about to occur from my experience. That event will be an explosive rally or a horrid market decline. And with all of these huge swings this week one thing has not changed… the market remains stuck under trend resistance.

Volume has not been convincing at all for me to believe at this time that a ‘bottom’ is in or even taking shape yet. On the contrary, the low volume leads me to believe that the gyrations we have been witnessing has been nothing but “spinning the wheels” and running the treads off the tires. What happens when the tires have no treads left? Wipeout.

I still maintain that any market advance should be sold, not bought. Every up day should be viewed as a gift for those who want to get out the market. Until there is something that occurs to drastically change the market direction in the charts, then I still must maintain that these are dangerous times to be trying to ‘call a bottom’, even a temporary one. Those who try and keep calling bottoms will eventually die by a thousand cuts.

Remember that every business, every ‘market’, and every person is coming to terms of a many decade long ‘credit bubble’ that has fallen apart rapidly over the past year. Every benchmark for evaluating ‘fair value’ and profit forecasts are all being put into question. Just what is fair value now? Just how can companies accurately gauge profit forecasts when the entire financial system that they have relied on for much of that growth has fallen apart. For many companies they simply don’t know and any attempt to provide profit guidance for the future is futile and comes down to guess work now. This is why the markets are so volatile, they don’t know how to price anything either.

So the next time someone comes on CNBC and says that companies are real cheap here and a great value… Ask yourself this question:

“A great value based on what? Historical earnings, year over year growth rates, or future business potential?”

In this rapidly deteriorating economy and the very fabric that has spurred a majority of the growth companies have known now evaporating… can you answer these questions?

Where are the S&P futures tonight? Doing another slow bleed downward yet again.

See you on Halloween! Trick? or Treat?