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    Monday, September 29, 2008

    Only 4 things I'll trade lately

    While the Feds engineer this "bailout", which it is not, we've been well served staying liquid. This "bailout" is in truth, much more like a margin call that cannot be met by banks. The government then exploits the fear (witness Bernanke and Paulson in front of Congress), so that "the people" are forced to cough up the $$$ to meet the call. That's the reality, nothing more or less, and all should be outraged. The irony is that it won't even work, so save your money (and votes) for something much more attractive, like free markets.

    I've been constantly reminding readers to venture into only in the most liquid vehicles, and to shorten holding times. This tactic has worked, and has kept me from making directional calls in a very uncertain climate. Individual stories are largely out the window, so focus on the fact that all investments are related, even if inversely. With this in mind, I've only day traded in the following: ZB (T-bond futures), JPY (yen futures), ES/NQ (stock index futures), and ZG (Gold futures). In short, it could still go either way, and position sizes should be reduced, if you have not already done so (I have traded "smaller" for several weeks now). Anybody that tells you they know what will happen next is simply deluding himself/herself. As an example, look at gold and the $USD index (an inverse relationship typically), both being UP today. Markets are always uncertain, but these times will wreck traders that do not comprehend risk management.

    Good luck and trade tight, if at all. Your liquidity is admired by all the big banks.

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