I changed my mind

I changed my mind about the market. I changed it several times, in fact, but I have settled on the reverse of my position last week. I now think that the market is more likely to go lower. There are several reasons for the change. First, because US markets were closed last Monday and the Fed made it's dramatic 75 bps announcement Tuesday morning, the markets never had the big, fast drop that slides usually end with. Last Tuesday's and Wednesday's lows were ultimately unsatisfying in that they did not shake out enough longs, and emboldened many (including myself) to gamble on some upside. Indeed, too many people have been saying that last Tues/Wed marked intermediate lows, and the market is poised for a good rebound before falling lower again. This suggests that too many people have assumed the worst is over for the time being and put risk back on the table.

Last Friday's slide was also indicative of a weak market. The high was at the open, (and slightly short of my 1380 target for SPX), and the market did not see it again all day. Despite a bit of a rally today, we are still far below Friday's high. This is not the sharp rebound that I was expecting.

Finally, today's new home sales data was aweful, providing another reminder how bad the economic situation is likely to get. I am not sure what Bernanke and co. are going to deliver on Wed, and I don't really care, but I don't think the market is going to be happy whatever it gets.

I returned to my previous short level earlier today, purchasing 3 units of HXD and 2 units of SDS.

MARKET POSITION: EQUITIES - SHORT (11 units); GOLD - LONG (1 unit)