Down and down she goes and where she stops…..

The wisdom of sticking to the trend and not trying to double guess the bottom was vividly illustrated yesterday with the Dow down almost 300 points.  It appears that a test of the November lows will occur and if that fails the yawning chasm awaits.  We read the markets’ recent reactions as a vote against partisanship in Washington and an expression of opinion that the stimulus plan is not big enough.  At the very least it is a vote of no-confidence for Washington.  The hackneyed,  lame battle cry of “tax cuts, tax cuts now, tax cuts tomorrow, tax cuts forever” will be heard as the stern of the Titanic disappears beneath the waves.  What is needed is a tax on financial instrument transfers to require the markets to pay for their drunken spree.  Meantime the virtue of not listening to pundits and watching the chart is once again illustrated.  Many advisors attempted to time the bottom of the market.  Dear readers this is a time when ordinary systems and methods have been blown to bits.  Only a wise and experienced reading of the chart and your own prudent decision making works here.  Fasten your seat belts.  There may be some rough weather ahead.  

We will shortly assess the wisdom of increasing short positions.  Remember — any selective buying you have done during this period MUST be protected by stops.

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