200 Point Rally Eliminated

Wow! There must be a whole lot of worry, such that on a day when crude oil declined to a fresh new low, the stock market gave up all its gains and is now down for the day. The Dow had gained over 200 points, and is now in negative territory today, despite that crude oil is still lower by more than $5. Now that's heavy-duty worry, if a $5 crude oil plunge can't move stocks to a sustainable rally! What would have happened if crude oil hadn't collapsed?

I am still anticipating much more tough sledding in the stock markets before the business climate improves. I like to see rallies of "irrational exuberance", because the higher the stock market rallies the more money I'll make as it plummets when the next shoe falls. All these traders who convince themselves that the bottom is "in" will be the people whose money I take when I short the market at some point in the future when the bottom falls out again.

The Dollar has been rising not because of any endemic strength but because there is a perception in the global markets that the U.S. has bottomed, or is close to it, and will be the first to emerge from economic malaise. I think this sentiment is erroneous, and eventually, the stock market indexes will plunge again when reality sets in. This is likely to occur sometime this fall when unemployment jumps unexpectedly or if GDP gets revised significantly lower. That is my bias. However, I will continue to give the market what it wants, even if it is "irrational exuberance"!

I have traded treasuries (long only) and stocks (both long and short) today. Grains were so close to limit down that I was unwilling to take additional trades. I'm convinced that unless the Dollar continues to strengthen significantly more, grain prices are very close to their lows for the year. However, for the short term, I expect the Dollar to continue to rise until another shock hits the market like the ones I've mentioned above.

I also traded the Euro futures a few times.

Good day! Nice volatility! It's nice to be back to normal volume levels after a long summer. Very nice day to be a trader!