Admit it: Yesterday felt right as rain. The Dow Industrials opened down nearly a hundred points and looked like hell all day. It was almost like being in love. We’ve waited many months for the stock market to register at least a dim recognition of the disaster taking shape in the U.S economy, and Monday’s effort may have provided a good start. Now, if sellers can just string together a few more such emetic events this week and next, pounding share values down to the point of rationality, we might even become buyers. Mind you, this wouldn’t be bargain hunting, just playing for an oversold bounce; for, like Bob Prechter, we see the blue chip average eventually trading below 1000. By that time, we’ll also be reading about squatters occupying Aspen’s toniest ski chalets, burning books and furniture just to keep warm, and even the noobs on CNBC will be talking about deflation as though they understand it.

If there was anything to mar yesterday’s anti-exuberance on Wall Street, it was this disturbing picture of D.R. Horton shares:

(Click on charts to enlarge)

Now, we’re well aware that there are some untethered bozos out there, a former Fed chairman unfortunately among them, who have declaimed an end to the housing bust. Their optimism is understandable, since, as in politics, the only way for an economist to scale the professional ladder is by telling people what they want to hear. But to see evidence that there are investors dumb enough to actually believe these lies is indeed disturbing. But what else are we to make Horton’s price action yesterday? The stock began the morning with a tip-of-the hat to reality, plunging two percent in the opening minutes. But then look at what happened: Smack in the middle of its next crowd-pleasing dive, it ran into persistent buying near 25.00 – buying with the apparent stopping power of a tail hook. We might ask, on a day when most stocks are plummeting, even the good ones, what on earth could have possessed the buyer to stand like a rock, bidding aggressively for shares of a company whose fortunes are tied to an economy poised to go over the falls.

Do these guys know that the “rock” they are standing on is actually the softening right side of a massive head-and-shoulders formation (see below)? Oh, well. If it weren’t for arrant stupidity of exactly this sort, “right shoulders” wouldn’t exist, and all charts would flatline, as equally astute buyers and sellers came into equilibrium.