Yowsers!

Well yesterday's purchases are working out very well today; and the markets are screaming higher, up 3%. I believe a lot of shorts are getting squeezed, and hard. This is a case study on why to layer in and out of positions; while I was hoping for lower prices than I bought yesterday and was realistic about the chance of losing money in the short term on what I bought in yesterday's layer, you just never know what the day to day brings.

At this point I have about 12% Ultrashort exposure, and will begin (speaking of) layering in some new exposure, but slowly. Today's news is actually (potentially) a lot more effective than anything else the Fed has done - and most likely we'll see the amounts increase over time. Moral hazard or not. Even the dollar is going up; that's how positive the news is - nothing makes the dollar go up anymore. With that said, still a bear market - still a huge amount of negative issues, and we'll look for some more down movement in the near future. But for now, we can clap our hands together as we anticipate the 50 basis point cutting next week, and then we'll probably return to reality. Overall, I simply view this move as overconfidant bears getting smashed, and I doubt we are returning to an era of new buying - not with all the underlying issues. But for now we drink Kool Aid.

With the S&P 500 all the way back up to 1312, I foresee a potential move to 1330 as a first resistance level where my game plan is to be more aggressive in buying Ultrashort exposure, and if the Kool Aid is really pervasive we could get back to 1370. Once again, a bipolar market - 24 hours ago we were about to fall off the cliff, and now we are talking about retests of recent highs. The market humbles everyone eventually. Again, I was simply fortunate to have layered out of my short exposure by half going into today... while I am bearish, I expected a bounce off that S&P 1270 level, but certainly could not foresee the type of action today. But as I've been stating for months - we have to be careful of "intervention" at any moment from the short side.

Don't forget the underlying situation and the fact this is a traders market. I continue to draw down long positions in euphoria and try to buy during dread. Over time this has seemed to work, even in a generally down market we've enjoyed since last summer.