Pop, Drop, and BOOM…Playing Out 11-9-05

Good Afternoon.

In yesterday's post we said that the market would likely have a pop before a drop. This morning our prediction seemed a little faulty as the Bearish sentiment was following through from yesterday's lackluster action. The Crude Oil inventory numbers which were fundamentally bullish for the stock market was used as an opportunity to short by the immature Bears. Fortunately we chose not to do anything at that moment and wait for our predicted levels. Once the market surpassed the level where most Bears shorted earlier today, many covered and gave us the hoped for "pop".

In practicing what we preach we have indeed lightened up a little more exposure by hedging with NASDAQ 100 Trust (QQQQ) at NASDAQ 2180. Our belief is that once the immature Bears have fully covered this morning's short sales, the more patient Bears will get aggressive around these higher levels. Therefore, we choose to temporarily decrease our aggressiveness.

Patience is a virtue.

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