On Friday, I explained why the market didn’t like hearing Bernanke, Paulson, or President Bush speaking on CNBC. So far this week, I haven’t seen one second of Bernanke, Paulson, or Bush on CNBC – and the market has rallied.

Do you see how I control the world now?

(Note to new readers: while this blog has about a thousand readers per day, I can see from doing reverse-DNS look-ups on my server logs that I have many readers in high places. My ideas have shown up on CNBC many times.)

Why would I save the market if I’m bearish? Easy. I don’t like shorting “into the hole.” When the market is oversold, shorting is very dangerous as many bears found out on Tuesday. But if I have a nice, big, fat and stupid bear-market rally to short, then I can print money with little risk, just like I did in June. I dream of another bear-market rally like that…

Rally Strength
The first monster rally that we had was on Monday, October 13. That was a gap-and-go day. Traders liked the bottoming action on the 10th, and were not ambivalent about getting long the next day. Tuesday’s rally looked more like a two-hour short-squeeze triggered by some weird euro/yen thing that will have absolutely no effect on the US economy. Zero new jobs will be created in the USA because Japan cuts interest rates by a quarter point.

SPY’s volume was indeed good, but QQQQ’s, XLF’s, and IWM’s were so-so. XLF and IWM actually had lower volume than they did on the 13th.

Tuesday’s rally was almost certainly a short squeeze, and not the result of bulls with conviction.

Selling the opening gap on the 14th was an incredibly fantastic trade. Let’s see if history repeats. I will be watching the IWM closely for follow-through because it is the weakest of the big-four ETF’s and the market cannot get far without it.

Watch the comments for updates throughout the day.

As today’s rally was fizzling out around 2:10pm (or so), CNBC reported that Japan was going to cut it’s interest rate in half – from 0.50% to 0.25%. While a quarter-point rate cut doesn’t mean anything to me, it obviously means quite a lot to a good number of traders because the NYSE TICK jumped immediately and the market was off to the races.

Here are some possible reasons why Japan saved our market today:

1. It may have been a signal that another round of coordinated rate cuts was coming from the world’s central banks.
2. A quarter point may mean a lot to carry traders, and European hedge funds might not blow up so much in the near future.
3. It may have been a sign that Japan is commited to driving down the value of the yen, which will also help carry traders.

Will this have any effect on next Friday’s jobs report? Of course not. If you want to buy into this rally, you will need to gird your loins for what may be the first of a long series of -200k, or worse, jobs reports coming over the next several months. The market is not thinking about that today, but it will be soon.

SPY Hangs by a Thread
The market had a bit of a rally going today until what looked like a wave of mutual-fund redemption selling hit in the afternoon. Bottom-fishers are no doubt clinging to hope since SPY was able to close above its October 10th intra-day low, but that’s a thin reed. The NASDAQ composite, NYSE composite, and Russell 2000 have all smashed their October 10th lows, so there isn’t much hope that SPY can hold on much longer.

Is Art Cashin Senile?
On CNBC this morning, Art Cashin was complaining that the banks were lagging. At the time, the XLF was the leading sector with a 2% rally going. What was he thinking? OK, maybe a couple of banks were down, but the financials were definitely strong this morning.

Cashin also keeps saying that we need a washout to put in a lasting low. But it looks to me like we have had a least a dozen washouts already. I think that Cashin is missing the point. Hedge funds are not going to emotionally capitulate. They are going to be steadily butchered by margin clerks until the massacre is complete.

Cashin has been right to be bearish, but he needs to start thinking in terms of liquidation rather than normal sentiment-based stock trading.

Feisty Futures
The futures have been mostly green 7 hours after Monday’s close, so maybe we will get a Turn-Around Tuesday. But the 2002 lows beckon and rallies are still for selling until they’re not.

Watch the comments for updates throughout the day.

The futures also have a “black line” like SPY does on the chart I posted on Sunday. After opening on Sunday night, the futures rallied up to their black line and then flopped right over. So far, so bad.

Watch the comments for updates throughout the day.