I mentioned in my last entry that the next couple of days would be critical and they didn't disappoint. Todays "beating of the bulls" was the markets latest and perhaps most damaging lesson in an ongoing trip into the history books. The market has literally come to the brink.

With the Dow right at it's November closing lows and the S&P not far behind, and the running triangle pattern suggesting much more downside ahead, we could be about to find out what real panic looks like. If the November lows are breached in the major indexes,  I'm afraid a large portion of the investing public will throw in the towel and not look back. It will be part of a process I've expected to unfold at some point, just not so soon.

I've known for some time that the public will abandon stocks eventually. Once they've lost enough money fear will over power greed just like in the 1930's.  I expected we'd begin to see it later this year, but it may show up early. Ask your friends how they feel. Are they ready to give up the stock market for good? Let me know what you find out.

The banking index hit a new low today at just over $23. Remember it topped at about $120 in early 2007. It's leading the market down and apparently still hasn't bottomed. It's already in my price window of a 75-90% decline equities. A move to anywhere near $12 should finish the job. That's ANOTHER 50% down from here. It's crazy the way the math works.

Gold and silver have taken on a life of their own. Gold and silver stocks have recovered some of their devastating losses as well, but I'm concerned about the patterns I see in both. The XAU appears to be near the end of a megaphone pattern. Gold appeared to be in the same pattern but has extended beyond what the pattern would normally allow. With the dollar breaking up out of a bullish consolidation pattern it paints perhaps a confusing picture. Something has to give, or does it?

My best guess is that deflation is winning the battle and gold and silver will soon rejoin the party. If right about now you're steaming about my comments and want to send me a nasty gram about how stupid I am about gold and silver, I have a news flash for you....you're doomed as a trader. That emotion you're feeling is your enemy. It's what keeps you in a position when it's a lost cause. If you can't tame it, you better get out while you still have capital left. And that's some of the best free advice anyone will ever give you.

Only a "double bottom" in the indexes can save the bulls now. On the other side of that lies whatever is over the brink.