Capitulation? Hard To Say

Charts: The S&P 500 closed at 1066, up .3%. The market is in a correction. So far the correction has formed what chartists call a “waterfall.” A waterfall can be unpredictable. It leads to “capitulation” where sellers throw in the towel and there is one final plunge and then a V-shaped turnaround. Today looked like capitulation. The problem is that the last time we saw capitulation from a waterfall the VIX (fear gauge) was four times higher.

Fundamentals: . The government's Household Survey said a whopping 541,00 new jobs were created in January. The government's Payroll Survey said 20,000 jobs were lost. The ADP Payroll Survey said 22,000 jobs were lost. Unemployment dropped to 9.9%.

Geopolitics: Gen. McChrystal is telling the Taliban exactly where he will attack once his big offensive starts. The Taliban wishes he wouldn’t do this. It means that civilians will flee the targeted village and leave the good guys a free hand at using air power and heavy weapons. After the battle is over civilians will be promptly paid for the houses destroyed.