Ah, meant to post this Friday….

Yesterday’s close on the Dow, a 6-year low, has brought back the flight to quality crowd who are hitting the offer for bonds, notes, mortgage backs, gold, and anything else that fall under the safe haven umbrella. Stocks took out the November low, punishing most sectors, especially the financials.

Fears of nationalizing Citi and B of A are doing the damage. S & P futures however, are still holding above the November low (740), now trading at 762. It is the last line in the sand and if violated, especially on a day end closing basis, should start another leg down towards 6000 (Dow). If this happens, your 401K which is now a 201K, will turn into a 101K. Fingers crossed for that level to hold.

Earlier today, CPI, inflation at the consumer level, came in spot on up .3% headline and up .2% core. The print left inflation unchanged for the 12 month period ending January 2008 while achieving the lowest level gain in 53 years. Fast money traders have done their best Sugar Ray Robinson imitation as the bob and weave trading is a fast moving target. When it comes to the economy, there is no quick fix on the road to redemption. The bad news is there’s probably more economic pain on the horizon to be endured as we wring out the excess. Time will heal the destruction but many are growing impatient with the White House, the Treasury, and questionable “plans” that look more like entitlement to me than anything else.

Technically, the buying today has kept the market from building on yesterday’s bearish trend. For the strength to be meaningful, we need to see a close below 2.73% on the 10 year note (currently at 2.728%). Elliot Wave patterns remain constructive but added and continued momentum is needed for this to be more than a one hit wonder. Currently, the 10 year note is plus 35/32’s, mortgage backs up 10/32’s, and stocks off 124 points on the Dow.

Be careful out there.