DON'T BE FOOLED

Don't be fooled by today's rally. If you look at an intra day chart, you will see that today's move was choppy and rising...usually an indication of a sucker's rally. We retraced yesterday's move by 50%. I can't tell you exactly when we are heading lower... only that it is likely we are heading lower. The next target area is around 950 on the S&P 500. Today's rally provided a great opportunity to buy put options for the next move down. If you missed yesterday's move, you got a second chance today. I expected a rally today...just not as big as what we got. In hindsight, I think the larger-than-expected rally worked out just perfect. I was nervous that too many people were expecting another move down. When too many people expect it, it usually doesn't happen. Remember, the market will try to hurt as many people as possible. In other words, when the majority of the crowd expects something, the market will often do the opposite. As I read some of the headlines on the financial websites, I saw that many "experts" were dismissing yesterday's decline. They are expecting the bullish trend to continue from here. Although that could be possible, it is not likely. However, that shift in some of the crowd sentiment could help lead the market lower in the next few days. I feel as strong about the expected decline as I did about the expected rally just a few weeks ago. We saw how that turned out. Let's see if I'm right again. If I am right, somebody owes me a trip to Hawaii. I could use the vacation.