Fortunately, if a tad belatedly, it would appear that not all analysts are constrained by their public relations departments from telling it like it is. Goldman Sachs, for one, released an analysis on Friday that said the Fed will have no choice but to lower the Federal funds rate to around 1% from its present 1.75%. Goldman evidently thinks itself quite clever to have imagined this scenario, even if for months a further easing of short-term rates has struck some of us as an absolute no-brainer. The firm further asserted that the Fed's Open Market Committee itself will not recognize that lowering interest rates is necessary until the economy slackens to the extent that Goldman's best and brightest are now predicting. Goldman is not exactly our idea of a firm on the cutting-edge of economic analysis, but it must be conceded that so trenchant an outlook from such a mainstream Leviathan is a bit unusual.

Even so, the firm's analysts have stopped short of the epiphany that many experienced long ago, one that links America's fate to that of deflationary Japan. To see the connection in its simplest form is to wonder how anyone could have believed, as most observers evidently did for the past decade, that the world's second biggest economy could get sucked into a deflationary black hole without taking the world's biggest economy with it. With the unsettling answer slowly coming into focus, what worries most is that U.S. households lack the enormous savings that so far have helped Japanese households keep deflationary ruin at bay. It should be emphasized that Japan had considerable help in this task from U.S. consumers, whose insatiable demand for foreign goods has been a crucial prop for the global economy. This fact begs the question, Who will buttress the U.S. economy in its hour of most desperate need? Certainly not the consumer, whose epic borrowing spree is perforce at an end. Might 4% mortgage rates and another flurry of cash-back financing for homeowners turn the tide? Better think again; for, what would you do with the extra money? Blow it on a Lexus? A Jeep Wagoneer? A family trip to Disney World? I don't think so, not this time. More likely, you'd use it to retire debt, inadvertently contributing to the macroeconomic pull of deflation. With deflation feeding on the largest pile of debt ever amassed by a nation, we should not expect the Fed's last-ditch countertactic to produce even the slightest blip in the economy. This may be a foregone conclusion, since the stock market, in its relentless decline, seems to be sniffing out a truth that few economists dare to utter -- that deflation has by now grown far too powerful to reverse, and that all attempts to do so can only increase the indebtedness on which deflation feeds.

(The '+' symbol means we have an open position, while $ means there is actionable advice.]

DJIA (8043.63): A 50% retracement of the recent monster rally would have left the Dow resting at 8147, but when the blue chip index broke below that number on Monday, it signaled a likely move to the 0.618 Fibonacci line. That's at 7993, a target which came close to being achieved before yesterday's session ended. It is unfortunate that Monday's close left the Dow so close to the Fib support, since selling in the opening minutes could easily push it below that number. If so, the only supports we need consider are near the round numbers (i.e., at 7900, 7800, 7700, etcetera), and at 7532.66, the July 24 bottom. The pullback so far looks no worse than "healthy and normal" on the daily chart, but if the DJIA should close down more than 80-100 points today, the correction would be like that cough that occurs in the first reel of a Hollywood weeper: a harbinger of fatal illness. To put the best face on it, we'll continue to assume that a major, sustainable rally is under way if the blue chip average launch a booster stage of at least 308 points after falling into the exact range 7993-8018. As noted here earlier, that's a pretty narrow window. But by demanding that this vehicle meet our criteria precisely, we can be more confident in our predictions if and when it does. To refresh your long-term respective, keep in mind that my minimum projection to complete the first leg of the bear market begun in January 2000 is 6985. The second, and final, leg will not have nearly so far to fall in terms of price, but I expect it to take considerably longer than this one.

$ SEP S&Ps (834.50): Our minimum downside target for the near-term is still 825.00, a Fibonacci level. In the first hour only, you can bottom-fish with an 825.00 bid for a single E-mini contract, stop 824.75 (!). This should be considered expert play, since it's not worth risking more than a few bucks on the stop. Thereafter, you'll be on your own. Please note that the futures could open below the stop, in which case market-on-open bidders risk getting crushed. If 825.00 fails as support -- a likelihood, in my view -- the next promising target is 764.30, a hidden pivot. It is there that I would urge expert and novice alike to try bottom-fishing, since it is a longstanding target about which I remain confident. Accordingly, bid 764.50 for a single E-mini contract, stop 762.75. Switch to a 4-point trailing stop above 782.00, using 797.50 as a minimum objective.

OEX (418.56): Monday's low came within 5 points of the 0.618 Fib support I'd noted at 412.67. I'd suggested buying an August 415 call (OXBHC) if and when the index got down there, but the trade could become tricky if that support is touched in the opening minutes of today's session, as I expect. We'll remain on the sidelines, but please note that the closest target of significance below the 400 level is 355.45, a "hidden" pivot.

$ SEP BONDS (107 30/32): As forecast, the futures eclipsed the 107 26/32 high made on July 24. Now they are an odds-on bet to reach 108 29/32, although that is now my minimum target rather than maximum, and it is likely to be achieved far sooner than the 2-5 weeks I'd originally allotted. If it happens within the next few days, we should be ready to lay out a short at the target, as follows: Until the final hour, offer a single contract short for 108 29/32, stop 109 1/32, day order.

QQQ (21.44): We've been using an 18.62 target for the intermediate term, but I'll suggest lowering our sights just a tad, since a hidden pivot at 16.42 now seems even more compelling. Either price can be bottom-fished aggressively with a tight stop, but it should be according to your own design.

DEC GOLD (309.60): Bullish as I've been on gold, I am nonetheless surprised at how little time investors may have had to buy the stuff during its recent sally down to 300. That's the way bull markets are supposed to unfold, of course, providing few comfortable opportunities to get aboard in the early stages. I felt comfortable enough about buying dips myself, but as you will already know, our accumulative bids in the gold stocks tracked below we're a bit on the stingy side, predicated on the weakness lasting longer than it now seems to have. I have no catch-up trade to recommend for today, but there is a minimum target for the near-term -- 317.90. That is derived from a Fibonacci, and if it is easily breached we should infer that further strength lies ahead.

$ SEP NASDAQ 100: (865.00): The futures sank so easily through a hidden pivot I'd flagged at 899.75 that the decline's predicted second stage down to 802 now looks more certain than ever. That is a double hidden pivot, incidentally -- a target of two separate patterns -- so it should be regarded as all but inevitable.

$ AOL (9.95): Our 0.05 for twenty September 15 calls (AOLIC) feels right as rain, since the market makers were stepping in front of us all day to pay 0.10 for them. Continue to bid them there and, if you buy any, to immediately offer a like number of August 15 calls (AOLHC) for 0.05, g-t-c. The stock looks like it could test the 8.70 bottom made on July 25, but that would not significantly diminish the bargain-basement value of September 15 calls bought for a nickel.

CSCO (11.89): CSCO may have closed above last autumn's 11.24 low, but the damage was done when it breached that number intraday, and its subsequent rally should fool no one into thinking that weakness will not continue to plague the stock. Long-term buyers of Cisco should not consider loading up until such time as it achieves 8.83, an important hidden pivot and longstanding target of ours.

INTC (15.88): I've recalculated my bear-market target for Intel and it looks more like 7.86 than the 8.07 given here earlier. The number has no value for us right now for purposes of trading, but it does give you some idea of how much further this former bellwether would have to fall before I could sound the all-clear siren.

+ C (28.65): We've had this drecker pegged perfectly for a long, long time, and there should therefore be little doubt that it eventually will trade under $10, as originally forecast here several years ago. Over the years, we provided similarly "absurd" targets for Cisco, Amazon, Sun Micro, Qualcomm and many other former high-fliers, and prayerful bulls should take little comfort in the fact that virtually all of the super-bearish targets eventually were achieved. For today, there is nothing further I can suggest to augment the small backspread we hold -- a single Sep 35 put versus 100 shares of stock. We were offering a Sep 35 call short to turn the position into a conversion (not a reverse conversion, or "reversal," as incorrectly written here) , but we'll cancel the offer for now, since the calls are not worth selling at these levels.

$ + GG (8.29): We hold 400 shares for an average 7.58. Our 10.33 minimum rally target looks well out-of-reach for the near-term, but we'll nonetheless continue to offer 200 shares at 10.29, g-t-c. Monday's sharp decline in the stock could only be a result of the threefold ignorance that surpasses all stupidity. Shantih, shantih, shantih.

+ DROOY (3.25): We hold 600 shares for an average 4.29. Yesterday's rally somewhat exceeded our 3.52 minimum target, but there was no consequence when Durban pulled back into the close, since we were not trying to take profits. Nor shall we for now, so sit tight.

$ + MSFT (43.99): We hold two August 45 calls (MQFHI) for 1.60. Continue to offer one of them to close for 2.40, g-t-c. The stock should show excellent relative strength right down to the bottom of this bear market, so if we hold calls in any stock, it should be this one -- provided we get aboard when the stock is making intermediate-term lows.

BBH (77.70): A contingency on the order restrained us from buying September 90 calls, but there is no urgent reason to try again today. If the index slips any further today, we should infer it's on its way to test a Fib-based support at 73.85.

IBM (67.90): IBM has fallen for the umpteenth time to the support of multiple lows near 66 that have accrued since June. One of these days it's going to break down and proceed in haste to the $50 target we first broached here months ago. Until then, it is likely to remain for us a source of tedium rather than of entertainment and profit.