(Note: I’m still on semi-vacation. Posting will resume its normal pace in September.)

The Roof! The Roof! The Roof is on fire! We don’t need no water, let the mutha-f#^*@ burn. Burn mutha-f#^*@, burn!

Apparently the Fed (aka The Plunge Protection Team (PPT)) isn’t down with “letting it burn”. The US Fed joined other global PPTs and injected billions of dollars into the ’system’ on Thursday and Friday. According to the NY Times:

Hoping to provide some comfort that there is ample cash available, the Federal Reserve made its largest intervention since the markets reopened Sept. 19, 2001, in the wake of the terrorist attacks. The central bank injected $38 billion into the financial system on top of the $24 billion it put in on Thursday.

Well that action calmed the market a bit on Friday but who knows what will come in the longer term. I think it’s just dragging out the inevitable but what do I know?

On another note, I can’t recall when I’ve seen the market be so volatile on an intraday basis. Some people are blaming that on the recent change to the uptick rule for short selling but I’m not convinced of that. Big money players have always been able to get short via futures, ETFs, etc. I like the theory that it’s all the black box computerized trading causing this madness. Combine that with over-leveraged hedge funds and forced liquidations and you’ve got the kind of moves we’ve been seeing.

Anyway, here are the charts of the indices along with Apple Inc. (AAPL) by request:

The Nasdaq bounced just above 2500 and Monday’s low. It’s solidly in what I like to call “no man’s land” between the 50 and 200-day moving averages. A break of either moving average could be a big deal so I’ll be watching those lines closely… even on my semi-vacation.

It’s a similar situation for the S&P 500 but it’s very close to breaking into bear country under its 200-day moving average.

I decided to show IWM instead of the actual Russell 2000 chart in order to show the volume surge over the last 3 weeks. That’s some serious dumpage of small caps.

Even the mighty Apple got dragged down by the market. It’s now back to where it was before the iPhone release. It’s down a quick 15% off its all-time high and close to some support around 115. Although giving up all of that post-iPhone rally is a bad sign the stock doesn’t look damaged to me at all. It may present a decent risk:reward right here with a well-placed stop… and assuming the market doesn’t fall apart. :-)

Trend Nasdaq S&P 500 Russell 2000
Primary Up Lat(-) Down
Intermediate Down Down Down
Short-term Down Down Down

(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend

*** I’m simply using the indices’ relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.