74.34---A Number to Watch Now On the SPY

SATURDAY UPDATE: Larry Kudlow in no uncertain terms: President Obama has declared war on investors and capitalism.

I awakened early Friday morning to the most dramatic wind and rain storm I've ever witnessed and truly thought I was about to become airborne---along with my neighbors--flying through the air over the city in every state of disrepair. Eventually this fiercest-of storms subsided and I deemed it safe enough to hop out of bed and tip toe in my nightgown to make coffee.

As I puttered around my still-standing kitchen, my thoughts turned from the storm outside to the one that continues on what's left of Wall Street and began to mull over the conversation I'd had yesterday with Tom, a very smart money manager and world-class tennis player. Tom is the kind of guy who loves a big challenge but the last six months were clearly wearing on him.

"It's bru-tal out there," he told me, reiterating something we all know only too well. "I mean, I come to work everyday with my shield and helmet on and just hope and pray we're not going to fall through to some new bottom now."

"Bottom?" I asked. "What might it look like?"

"We're really hoping the SPY will hold above the 74.34 mark . If it takes out this number---the last time it came close and retested a bottom, it held at 74.59--- I can't predict what carnage will ensue. No one wants to think about it. But 74.34 is a pivotal number that we're all watching."

I pressed Tom to go on. "Look, Jane," he said. "Wall Street is scared to death of President Obama now. He continues to say things that sound good but have no meaning, no real definition, no details, except how bad things are and how much government needs to tax and spend to make it better. Men like Geithner are just yes men who will ultimately do what they're told. There's absolutely nothing to sink our teeth into here. And markets hate this kind of uncertainty."

Do you think this administration will raise taxes? I asked Tom.

"Absolutely, " Tom responded. "But they'll wait until things start to look a little better in a year or two to do it. And it will kill any long-term rally up ahead. Kill it. That's why Wall Street is in this state. It knows the Obama administration may wreck the economy for years to come."

Tom went on to say there would probably be at least a short-term counter trend and uptick at some point soon, maybe even next week. But the extent of it is dubious. "By the time it happens the smart money will be in and out before the public starts to pile back in....and then be killed again. I tell you it's about as gloomy as it can get."

In the many years I'd known Tom, I had never known him to be so pessimistic. I left with the reminder to watch 74.34 on the S&P. If it holds, then we'll have at least a short counter trend.

If not, Katy-bar-the-door.

Gosh, it'd be nice to see a little sunshine. But here at least and all up the East coast for now, the weather forecast promises to remain gloomy and over-cast. Still we're not all flying through the air----yet.

Meanwhile and in other things worth mentioning, Clint wants a word with us. And I like what I read.