Readers of these pages have long known that May 4-5 is an important cyclical period in our analysis, and that we have been calling for a short term equity low basis the Nasdaq 100 toward at least 3440, and more likely 2950/70 near that date. Basis the Fibonacci rhythm of the S&P 500, May 18th looms as a secondary target for a potential low. We thus have a definite time and price window between May 4-May 18 to look for a tradeable bottom. Basis the DJIA, we see a move to 9100 by this window in a real smash, with a likely handle for the S&P in the 1200's.

Should such a drop occur, the longer term picture for equities will be cemented as a negative one. Conversely, if the Nasdaq 100 can stabilize toward 3440, maybe the longer term bull will survive. All of our analysis and instincts lean toward the former path, but now is the time for the market to provide its own evidence. Is this a real crash or not? We think it is.

Interestingly, the attached link to Grant's Interest Rate Observer's article "The Great Productivity Delusion" also points to May 4 as an important date for entirely different fundamental reason. Today's CPI shows we have inflation; and that latter day's economic release should show nonfarm productivity nowhere close to the current perceptions. While much of the actual damage to the equity market may already be done by then (Sorry, Jim Grant -- great article but not a good timing tool to go short), we doubt if any of the implications have yet to be reflected in the metals markets. Take a deep breath and pull out a chart of gold -- a market now largely unchanged in price from the late 1970's. Now how many other things in this world can you say that about? Tiger Management may have pulled the rip cord on value-investing when they closed up shop a few days ago, but we have not. Gold represents outstanding value that few are focused on amidst the rest of the chaos.

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Sand Spring Advisors provides information and analysis from sources and using methods it believes reliable, but cannot accept responsibility for any trading losses that may be incurred as a result of our analysis. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities, and should always trade at a position size level well within their financial condition. Principals of Sand Spring Advisors may carry positions in securities or futures discussed, but as a matter of policy will always so disclose this if it is the case, and will specifically not trade in any described security or futures for a period 5 business days prior to or subsequent to a commentary being released on a given security or futures.