Wed. March 14, 2007

Volatility is the name of this new economy, it is no longer the Goldilocks economy. We were down triple digits today only to end the day up over 50 pts., in the Dow. This is the second time down with a subsequent recovery, usually there is only one move down then spring back up to new highs. This is not the case now. What is the case is that we will break down, only to have the Fed come in support the market and then break down again. This down move is not through yet, but the volatility will only increase. So, you want to be short, but you need to be willing to be patient and hold your shorts when the market is running in your face. Look to get short on rallies and then be patient. This 1400 level in the E-minis is very important and when we break through it, on a down move, you are pretty safe being short. Above 1400 it is not clear to be short, so you really need the Shadowtrader's Indicators in your favor.