Volatile Times

All the market indexes are in the process retracing back toward the previous highs, in hopes that the fed rate will follow suit with the discount rate. The dollar has been getting demolished in the FX markets, by lowering the fed rate-- our economy could be facing grave consequences in the next year. Increased inflation, lower valuation of our dollar in our already stumbling economy. Since the market essentially is "forward-looking" my take is that the speculative bulls have already priced in a cut in the fed rate, if we don't see a cut...look out below. Next year, when the democrats take over the political helm, look for higher taxes. Higher taxes will reduce spending and our GDP (see the Laffer Curve). On top of all this there has been an obvious bonanza in China, the markets have been going parabolic as of late. (take in mind the retail investors compare the price of stocks to pork). When this market comes crashing down, there is a definite possibility it will spill into all of the global marketplaces.

The bottom line is major institutions (the bullish guys) are not pricing any of these factors into their risk. The next few years will bring some choppy waters. Longs be careful and shorts be patient.

On another note, I'm still short CAH. I like it's lagging performance relative to the DOW. Although some big player has been manipulating the price of the stock upon opening bell and closing. We'll see how this works out.

Cheers.