Happy New Year to All

Top Line: The weekend's news is mostly about Gustav. The oil market has dropped about $4 this evening as Gustav is thought to have been a little less severe than expected. Yes, you guessed it, the US stock futures are stronger on that news as well.

As we go into the new week (and it's a considered a new Year here at the Update, BTW, Happy New Year to you), we are expecting a week that will disappoint the bulls. We saw the strength last week but the market was Down for the week and we expect further downside this week, net downside anyway. The news item of the week is the always popular jobs' report due out on Friday morning. This week, the announcement is expected to continue the trend of negative job growth with a loss of about 60K jobs.

The stock market is showing signs of fatigue, especially on Friday when the NASDAQ dropped almost enough to take out the rally of the two prior days. The NASDAQ should be leading the way South on this next down move. Last week as the Dow was trying to put on a brave face by holding up near the 11,600 the NASDAQ indexes were not faring so well. And, DELL did have a very negative impact on the NASDAQ on Friday, being down nearly 14%.

Our other indicator for this down move is the volatility measure, VXO. This index may have found a bottom and should have some upward mobility over the next few weeks.

We're going to pay special attention to the stock market these days because we are getting very close to a cliff dive and we want to be prepared for some action...that would be getting out of our short positions and consider the long side.

We trust you had a safe and enjoyable weekend. More from the Update tomorrow. Oh, yeah, the Update has a notion that the start of the "year" is Labor Day, not New Years' Day. This is because of the new start in the fall that we all had by starting school around Labor Day.

FSI: 81.11 (lowest close since August 4th)

VXO: 22.59 +1.91 (heading up to 50)

SDS: 65.11 +1.24
QID: 42.31 +1.33

Dow Industrials: 11,543.55 -171.63