We are still running a balancing act here as traders try to search for things to support their positions.

Right now there is no news so they have to try to manufacture it. During days like this it is amazing to see the non-stories that are snagged to "prove" a bearish or for that matter a bullish case.

We are in between earnings. No major conferences scheduled before MacExpo which usually gets the bulls frothing.

We have had 8 down days in a row for the NASDAQs and that is the traditional limit for multi-day declines. Does that mean it is time to back up the truck. It's like the game of roulette.
The gambler's fallacy is a logical fallacy which encompasses any of the following misconceptions:

A random event is more likely to occur because it has not happened for a period of time;
A random event is less likely to occur because it has not happened for a period of time;
A random event is more likely to occur because it recently happened; and
A random event is less likely to occur because it recently happened.

The fact is that we have seen extradordinary declines lasting 16 trading days. Does it mean we will end at 8 or even 16?...No. Each is an event unto itself.

What tilts the odds is that the selling dumps vast amounts of stock into the market place and at some point it becomes cheap enough to attract value buyers and we start a stock market recovery cycle that may or may not be permanent. That's what's happening with GOOG and AAPL and RIMM right now ahead of their earnings announcements. Normally when these juggernauts have been on a roll, earnings announcements provide the opportunity to take some well deserved profits off of the table. With prices already in decline as they are now we have the opposite opportunity. Buying before the announcements offers an opportunity to get bargains BEFORE the good news comes out.

The problem of course it that we all get caught up in the short term gyrations of the 24 hour news cycle. Nicholas Darvas made his first million in about a year, (the equivelent of $15m today), in the 50's using the forerunner of the Pitbull Trading System with week old data, sending telegrams from remote areas of the world with little or no communications of news events, housing or unemployment data or the other 50 reports traders hang on every week.

He lost almost half of it within 6 months when he returned to the exchange floor and started listening to other traders, news and economic reports.

He returned his suite in the Plaza, never went back to the exchange floor, returned to his isolationist stance and sent his orders to his broker by telegram 15 blocks away, and built his fortune back up over 2mil in very short order.

Earnings are what the markets are all about in the long term. Don't be distracted by the smaller side issues...they are just noise. Is it any surprise then that Countrywide is worth just a fraction of what is was a year ago. Likewise is it any surprise that APPL hit better than 100% growth last year. It's all about the earnings or the PROSPECT of earnings. Stocks will be bought before the earnings are realized because of analysts upgrades. If the stocks don't perform they get slaughtered.

Earnings projections continue to indicate a strong economy, not a recession as the pundits would have you believe. Yes, there will be secular bear markets...there always are, just as there are always secular bull markets.

Don't let the noise influence good sense.