The bounce I called for last week finally materialized, but was that ridiculous or what?  Recent price action is indicative of how serious the financial crisis is in this country.  Last week's rally was short covering - nothing more.  This market still has momentum sell signals written all over it.  Now we have the US Congress doing the equivalent of a college night 'cram session' to pass legislation that will reshape the financial foundation of this country so they can make their beloved October recess.  Am I the only one that sees a problem here?

The bottom line on this market is that if you don't have to play - stay out.  The trend is down, but with the government and SEC doing everything they can to support the market (bailouts, short selling bans, etc.), the interim, knee jerk rallies will be painful indeed to those who insist on playing the short side.  The US Dollar is already feeling the effects of a bloated balance sheet at the US Treasury.  The dollar got absolutely crushed yesterday as all of these bailouts are inflationary and bad for the home currency.  

I co-manage assets for a company and at this point, we are primarily in cash.  Other money managers I talk to are also unable to figure out what is coming next, so their game plans are ultra conservative in the short term as well.   All of you who are in cash need to make calls to your funds to make sure that your 'bucks will not be broken' as money funds holding toxic paper have the possibility of moving under $1.00 in net asset value.

No doubt about it, the trend is down and all of these people who are telling us to jump in and buy because there is 'great value' in this market are doing a terrible disservice to their clients.  It is now fashionable for the pundits to say that a bottom is in.  They are merely guessing.  Everything that I look at says that we have not bottomed yet.  The market will tell us when it is time to buy.  Right now the risk far outweighs the potential reward.