Market bounced back

I added one commentary in "Financial Article" section from professor Nouriel Roubini's blog, he has 10 predictions on the economy, if 5 of them turn out to be true, we maybe in bear market this year and early next year.

Market bounced back today on overseas gains:

1. Nasdaq up 1.9%, led the major index.
2. Gold ^GDM index up 3.5%, SSRI, PAAS, AEM, AUY, IAG, SLW, GLD and SLV all were big winners today.
3. URZ, FRG and EMU all were even stronger than the PM shares.
4. Short ETFs got crashed today with QID down 3.7%.
5. RIMM got 1 point higher, nothing major there.
6. I think today's bounce prepares us for another down leg. A correction and bear market always rewards buyers to keep them in the market, if everyone is leaving the market, then it's a bottom. A sharp rally is one way to keep people in to drag price lower over time.
7. Yes, it may rally again tomorrow, but I think the start of the next leg down is within weeks, if not days.

What's next:

1. There are two cases to play out in the future:
2. One is a short term correction (10-20%) and bull market resumes.
3. Second one is the start of a bear market into 2008.
4. If it's a correction, then I should sell ultra short ETFs when all are settled in a few months, like end of May or sometime in the summer, and move them into PM and uranium stocks.
5. But if it's a bear market, then I don't see PM and uranium stocks to be a great plays either, PM and uranium stocks may do better than general markets, but may still lose value over the bear market. Energy and oil will suffer as result of economy slowdown, it will affect commodities as well.
6. I don't know which one will play out, so I'll watch and wait.
7. There are two individual plays in this environment: one is high fliers like RIMM (BIDU) put; another one is mortgage puts on financials.
8. I think if RIMM(down 7% from all time high) is to catch BIDU (down 22% from YTD high, even after 4.6% gain today), we have at least 15% to go. I do not see any justification of its valuation this high, at this stage of the market. I don't think it can hold this price for long, it's just a matter of time. The time for momentum stocks is over.
9. RIMM will be less than 100 sometime this year, and maybe in the 60s this year or in 2008. Let's see.