11,000

Monday the market staged another rally as is the normal course for Monday’s.  This one left the Dow Industrials above the Magic 11,000 number.  So, all the bulls should be happy and Should Be Selling.  Once you get to the top of a mountain, you take a deep breath, look around and say “What a beautiful view”, and then go back down.

In Sunday’s post, titled SELL, we said to sell in Monday’s session and that we would deploy more funds on the short side here at WU.  The market gave us a remarkable opportunity to increase our positions with the gains recorded today.  We dived into more of the RYVNX at today’s close of 17.31 after getting in much higher in October at 20.56.

Today George Soros made the news with his 2007 pick for a US recession.  He thinks the Fed will move the funds rate up to a too high 4.75 % and deflate housing prices to tip the economy into a recession in 2007.  He said the collapse in housing prices could be associated with a dollar decline, something we have alluded to in these pages.  

Consumer credit fell in November marking the first consecutive two month decline since June 1992.  Last week there were other headlines that we noticed like, Freddie Mac sees home sales down 6% to 8% in 2006, US mortgage applications decrease, Americans saving less than nothing… At some point some one is going to put the dots together and make a very ugly picture of the true nature of the market.

In one of my daily reads, I saw an interesting thought that I wanted to share with you.  Stock prices are not sure what they want to do.  Stocks, like BBY, get hammered one day and magically bought the next.  Why is that?  The article suggested that there is no anticipation in the market by either the analysts or the players.  It suggested that no one is anticipating a price changing event in a stock, they are all following the price change going on right now.  

We have watched market rally for the past week on significant volume and probably should be a little more cautious about calling for an entry point here but the market is overbought and should be sold.  Momentum indicators have flattened and our favorite volume indicator has hit a high below the high set in early November.  The five day upside volume surged past 1.2 billion shares today and is flashing red.  We are pleased to be able to get these prices.  

Be Careful and Be Selling.  Cash is King.

Dow Industrials:  11,011.90  +52.59  (There you go)
RYVNX:  17.31
RYAIX:  21.10  (did you buy some of this today?)
TLT:  91.78
BEGBX:  13.36