Bernanke’s Christmas Gift

You may not have realized it, but the Fed just gave everyone their Christmas gift - a short-cover scare so that the smart money can reposition (i.e. go short) and get more defensive, before things really get bad. And, from what I saw on my screens today, reposition they did.

The only thing keeping the market intact is hope for a Santa Clause rally. I really hope that comes true - I have more stocks/etfs to sell.

Be defensive, hold lots of cash, don't be complacent with your longs, protect your assets, and if you're so inclined, look for strength to short. As for putting money to work on the long side, wake me up when we're back to extreme oversold conditions again. I don't plan one single buy until that point is reached. Such a tactic allowed me to survive and thrive in the past and I'm confident the same will hold true now.

We will see better days, but this is not the time for hope and faith that all is well. The market is sending us a message - are you listening?