This is going to be a quick post, because it's nearly midnight, and even bears need their sleep.

The modest pop higher today in the equities market, as I said earlier, was healthy. Things played out pretty much as I've been anticipating – – – energy strong, gold strong, euro strong, and equities, not so much. The $INDU did a beautiful job pushing up precisely to its major 61.8% retracement level. This is the kind of "fighting back" that the bulls need to do in order to give them hope and exhausted any pent-up buying interest.

The broader Russell index is more reflective of the market's underlying lack of strength. This spinning top shows the market's uncertainty, and prices are toying dangerously (for the bulls) with that 23.6% retracement level.

Energy, in contrast, was quite firm and bounced from an oversold state. The $DJUSEN is the basis of the popular DIG and DUG exchange traded funds, and it pushed up nearly 3% today.

But this energy rally – like that of equities – will not continue indefinitely. I think the tinted areas below indicate similar periods when prices (here, for USO) consolidated for a couple of weeks beneath a fan line, only to succumb and resume the fall.

As I am typing this, the plunge in Asian markets is causing a somewhat weak GLOBEX. Once this bear wakes up early Thursday morning, it'll be clear what effect the latest economic indicators on employment have on the new day. Good night!

I am attending a birthday celebration this evening, so my post will be late. The "damage" done by the Dow's rise was very modest today. I haven't had any time at all to look at charts, but the first thing I look at it the net dollar change in my portfolio, and it was small.

The kind folks at Elliott Wave International said I could show their charts from time to time, so here's one they just posted today. It shows the same trendline break I've been mentioning, but it has some labeling in there that might prove helpful.

I'll be writing late tonight; thanks for your patience!

I'm about to head out on a boating trip on the lake, so I'll be quiet for the rest of the trading day. (I piloted a boat for the first time in my life a few days ago, and we all made it back alive; I started the trip as Commodore Knight, but after I got pretty lost getting us back home, I demoted myself to Captain).

This morning's rise in equities is both expected and healthy. This intraday graph on the S&P 500 speaks for itself.

I'm a little surprised at how brief the rise in gold and oil was, although I'm not necessarily saying this brief micro-rally is the end of it. I took profits on my GLD calls early this morning, but I've got a number of oil calls still in place. Their stops are tight, set at yesterday's highs. It wouldn't take much to boink me out of those positions if oil doesn't get its footing.

See you after the close!

Gold's up. Oil is up. Equities are down. Three for three……….good! As we all let their stops do their work, I'll start the morning off with a different subject: nature.

Although I grew up and have always lived as a suburbanite, I strongly believe that spending some time close to nature is restorative for the soul. Yesterday I took my little girl for a walk in the woods here in Tahoe. It was very quiet, and we just strolled amongst the tall connifers and looked and listened to the stream.

Just to sit and stare at something as simple as this is calming. You can hear the wonderful sounds of the water; notice the beautiful way it flows around and above the rocks; look at the colors of the rocks and let the artistry of the plants draping themselves above the stream form a natural picture.

My girl found a long twig and slid it through the stream, pretending to "fish". It was really cute. We stayed there for a while, and it amplified for me the belief that kids have to be outdoors at least some of the time to appreciate God's creation (or the FSM's). Because what the market wants to push on children is a lot closer to this:

Yuck. One picture sure cancels the other out, doesn't it?

Yesterday I was encouraged by the market's fall and my portfolio's substantial increase in value, but I was very skeptical. As I've mentioned repeatedly, the giant bag of cash that enters and exits my account is far too well worn. Today it managed to stay, because the odds are increasingly tilting in the favor of the bears. Not only did the bag stay, but a second one showed up.

The economic news that was released this morning revealed that (a) inflation is starting to surge, currently at an annualized rate of 12%; (b) the housing market – – – in spite of all the liars in government and industry that would try to convince you otherwise – – – is nowhere near a bottom. Markets do occasionally get rational, and so the Dow had another triple-digit drop today. The price didn't just sneak a little beneath its trendline. It is now no-questions-asked below the trendline, in addition to being plainly beneath its critically important Fibonacci level.

I had substantial put positions on IWM and NDX, and I closed them both. I didn't do this because I think the indexes are going to soar – – – on the contrary, I think the odds of a substantial downturn unfolding in the coming weeks has gone up substantially. I did this out of a combination of (a) paranoia about the aforementioned disappearing money bag; (b) the fact that a lot of key ETFs and indexes were hitting Fibonacci retracements or other support levels. Looking at the IWM, prices were approaching areas of substantial congestion in the $72 level. If we get some market strength from our darling friends the bulls, IWM will probably push back to about the $74 level.

The $MSH has a more convincing support level, represented by the support line. I think the odds of it breaking this line are quite good, and doing so would only amplify the advantages the cerebral traders (e.g. the bears) have in this market.

Even more compelling than IWM is the actual index, the $RUT, which has nicely touched a very important Fibonacci level. This was the same level that got violated in late May and early June (much to my chagrin). Make no mistake, we are on the bulls' side of this level. We need to push beneath it to add more evidence to the bear case. This isn't a slam dunk; the bulls could take the baton away.

The S&P 500 performed well today for the bears too. One the bearish side, the trendline since July 15th is absolutely broken. On the bullish side, we are resting directly on the important level at 1270. A close beneath the lows of today and August 8th (that is, 1261) is a requirement. End of story.

You can see this more plainly with a closer view.

I have a hybrid portfolio at this point, because I have acquired a substantial quantity of calls related to energy and gold. I am counting on a rise in EUR/USD, gold, and oil.

Just as Tuesday morning was chock full of economic indicators, Wednesday is wholly devoid of it. There's no doubt it will be an interesting day, but even if the bulls push things higher, it will not undo the damage done in the week so far.