The news is saturated with Hank Paulson’s $700 bailout plan. This is diverting attention away from the increasingly bleak outlook for the wider economy.

Rick Pendergraft says no bailout can immediately solve the problems in the housing market. And all indicators suggest these will run well into 2009 at least.

Rick says your portfolio should be all about playing safe for now. He recommends eight inverse ETF plays to hedge against this downside risk.

This from Investor’s Daily Edge:

I can understand the fixation on the bailout, but other economic reports are getting lost as a result.

Last Thursday was a day that the mass distraction was working to its full capabilities. Investors chose to ignore all economic data in order to focus on the progress of Congress.

In case you missed it, durable goods orders for August were down 4.5 percent from July (I guess the stimulus checks ran out), initial jobless claims jumped to …

Big Wednesday Wipeout! Bonzai Pipeline, Oahu

It’s just a big picture but those are big waves! If you rode a wave successfully like that in markets yesterday you were probably pretty pumped-up to try again today. But, wipe-outs happen.

Okay, enough metaphors. This was a pretty ugly day. I day-traded most of the day and was marveling at the low volume and choppiness until the last hour when “BAM!” all hell broke loose.

This is what a bear market can do to you. If you were short yesterday you suffered like our surfer friend with that countertrend rally. But, you had to expect that with markets oversold! Today it’s back to reality, or what passes for it “today”. Tomorrow we go at one more time. Wax your boards!

Volume remains heavy and breadth is as negative today as positive …