Mr. Valentine Has Set The Price

OK, I am sure you are all looking for what's happening now and what is likely to happen tomorrow given today's rout in the Venice Surf Report picks.

* Japan up almost 2% on increased machine orders and news that companies like Canon are planning their first new manufacturing plants in a quarter century to meet demand for things like digital cameras (excpet in the U.S.)

* Banks rallying in Asia as well, most likely from the coattail effect of what happened in the U.S. today

* Consumer confidence at all time low in AUS

* Mostly mixed on other fronts.

* Oil up slightly in Asia trading

Well, here's the call.

I think it is very well likely that we may see a mini rally in financials over the next few days. Another 5-10% spike may well happen. And if it does, well our 2X shorts are going to feel some pain.

However, EVERY rally in financials in the last year has had three things in common.

* Traders sell into the rally taking short term profits, driving prices down

* Most of the rally can be attributed to people covering short positions, which by its nature drives prices up.

* It has inevitably faltered and swung the other way quickly

So, the real question is: does today's activity really mark the bottom, or is it just another knee jerk reaction to good news that in the end, in my opinion, doesn't change the fundamental picture?

And the only answer I can come up with is no.

So, I won't presume to tell you what to do, although you can certainly guess what my plans are. I have put on stop limits on all of my picks at another 10% down and if they get taken out, well, I can live with that. Sure, it wouldn't be as nice as if I had sold it all yesterday afternoon, but hindsight is 20/20, and you never achieve anything looking in the rearview mirror.

Do what you think is best and what suits your particular needs, but keep in mind that stocks NEVER move in a straight line, the run up we have seen has been nothing less than remarkable and a pull back short term is certainly possible.

But I spent an hour on the phone speaking with several brokers I know and trust and without fault they said today was the classic suckers rally, and those that went long today are in for some pain.

I agree.

Volatility by it's definition means wild swings, and this is a classic case of that. But the real question is how are these companies doing on a macro level and what are their prospects moving forward?

I'm going to ride it out, to a certain point, and if it pulls back from there I will wait for further drops and get back in then.

Gordon Gecko said: never get emotional about stocks.

Let's keep out fingers crossed and please remember, I am in the same baot as you and am putting my money where my mouth is.

Oh, also, it wouldn't hurt to pray for a nuclear attack on Iran by Israel or a major explosion at a refinery in Saudi Arabia.

Tune in tomorrow and let's see what happens.