Market Uncertainty; Dec. 18, 2008

The market broke my control point and the near term structure is unclear to me. This rally is a correction but it's a 4th wave and there are several possibilities, and a few of them would take the S&P to 950-1000. Other possibilities take the S&P towards new lows on the year. With this uncertainty, I closed most of my long positions and have reduced all my position sizes except for my short gold positions. Tomorrow is options expiration day so it should be a wild one. But if the market follows through with more selling on weak breadth then it's possible the next decline phase is underway.

All I can say what I'm going to do is take the thinking of "the quick and the dead". I will look for short term opportunities and keep stop losses tight and positions size small until I get more certainty as to what exactly is transpiring. I will take profits when available fairly quickly and trail my stops. But I don't have confidence taking a strong stance either bullish or bearish right now. But I can assure you that rallies above 920 in the S&P I will start adding small short S&P positions gradually as the market rises. The lows of 2008 of 740 will be broken in my opinion.

The quick and dead..............or maybe I should say, the quick and the broke!