Interpreting Yesterday's Rally

So I am sitting there, and the market's down around 4%. The S&P had breached the October lows, and I'm loaded with short positions, including a pretty large position in the ultrashort EEV. Then it suddenly occurs to me, everybody's watching this level, including the government. And they have hundreds of billions of dollars to buy stocks! I started thinking, if I'm Hank Paulson, I'd be buying hand over fist now to protect the low, maybe put a floor under this market. So I covered a bunch of positions, although unfortunately too few, and what had been a magnificently profitable day turned into something quite mundane. That was some gut-wrenching, exhausting action.

So call me a tin-hat conspiracy guy, but I think we would still be dropping if it weren't for the plunge-protection team. All the same, I will respect the rally, since it is exactly what I was looking for in order to move to a bullish orientation. I do not think we have seen the end of the bear market, but I am ready to start buying some stocks.

As I have mentioned previously, I am looking most closely at commodity, energy, and emerging market stocks. We can see that both the China and Brazil ETF's outperformed the market yesterday. I am hoping for some kind of pullback for a lower-risk entry on both.





Considering the volatility we saw yesterday, I am not ready to jump in with both feet yet. But here is a watchlist going into Friday's session, all long: MT, NUE, TS, SID, GGB, FCX, OLN, AA, CENX, FSLR, ATI, RTI, JASO, APD, FPL, APWR, OMG, APA, XTO, KWK, DVN, CLR, SWN, TLM, NBL, NE, UPL, RRC, XCO, HP, SD, NOV, WFT, BHI, SII, BJS, POT, CF, JST, BBD, GFA, RIO, PBR, CIG ELP, VCP, SBS, CBD.