Educational use only. Never intended as advice.

ALWAYS CLICK ON CHART TO ENLARGE. Here's a chart of the Russell 2000. At the bottom of the chart is the white Relative Strength line, with a 15 period 3 standard deviation band around it. The orange line is what I call a Mandelbrot derivative, a mathematical construction of overbought and oversold. Res ispa loquitur .

The market can do anything. I believe that today's action in the wake of Google's 'hiccup' indicates manipulation, pure and simple. How do I know? I don't. What I do know is that debts and deficits are spiralling out of control, and that eventually, this spells trouble. Does that mean 'get short and get creamed?' No. But if one is bullish at tops and bearish at bottoms, which is of course, the American Way, then one will underperform the indexes.

Richard Russell has a chart similar to this on his site, comparing Gold to the 30-year bond. His point? The market is making a relative bet concerning gold and domestic paper, which is a strong statement.

Mandelbrot numbers.

Mandelbrot numbers are what I call my relative overbought to oversold numbers. Looking amidst the Generals' stocks, at the high end (positive) are:

• ATI 198
• AMD 173
• BRCM 159
• X 124
• HAL 105
• MNST 102
• NEM 95

At the low end:

• JNPR -80
• TSN -59
• CBS -53
• BSX -46
• INTC -35

Do I believe in this stuff? Absolutely. Above is the chart of Geron (GERN) which I bought today at 7.70, with a Mandelbrot number of -27 at the end of the day.

Among the ETFs trading over 400,000 shares a day, only 3 have negative Mandelbrot numbers, TLT at -4, HHH at -4, and SHY at -1. EWZ is 80, OIH 66, EEM 58, GLD 48, IWM 30.

Looking at the Russell 2000 holder (IWM) another way, it is almost 4% above its price 13 days ago and over 12% above its 200 day average.

Could the RUT go higher? A lot. Even the stodgy SPX got almost 14% over the 200 day average in 2003-2004. Everything is relative.

Dynamics: SPX = SP500, RUT = Russell 2000

TRIN5 1

VXO 11.99 with ten period average of 12.66

Stochastics oversold: SPX 16%, RUT 8%

Worden T2108 75%

Close > Moving average 50: SPX 60%, RUT 76%

Close > Moving average 10: SPX 57%, RUT 71%

First of February, so there's new money, and old gamesmanship at play. What's your edge? Are you disciplined enough to adhere to it? Do you accept the verdict of the market, or does the small voice inside you say, "no, I am right." If you are right, your account should validate you.

Good trading and great risk management to all.