Market has Fed rally the last two days

Market has a good day again, moved ahead of Fed's meeting tomorrow.

1. It's well known now the Fed won't do anything to harm the market, Mr. Bernanke is very market friendly, so traders moved in ahead of the meeting.
2. Last few Fed meetings, we had rally after the Fed meeting, so this time, smart traders moved early.
3. But long term, I don't see market move significant higher from here, the housing market is heading south, the economy is slowing.
4. So it's more likely to have a sharply correction than rally. I'll continue to hold these short positions, but it's tough.
5. I see the market rally tomorrow, but won't be surprised it sells off after Fed meeting, or later this week.

Following is the housing inventory number, it's not closing to bottom, as a matter of fact, it has to show significant reduction before we can call it a bottom.

Housing Inventory (months of supply, new and existing homes):
Year --------------New------------- Existing

2002 --------------5.8-----------------4.7

2003 --------------5.5-----------------4.6

2004 --------------4.1----------------- 4.3

2005 --------------4.8-----------------4.5

2006 (Jan) -------5.7 -----------------6.5

2006 (July)-- -----7.2-----------------7.3

2007 (Jan) -------6.8------------------6.6

RIMM:

1. Closed down again on an up market for two days in a row.
2. S&P think RIMM will miss by 4 cents this quarter, if that's the case, it will sell off.
3. Palm's rumor and Google phone rumor show the intensive competition in the smartphone market, and Apple's iPhone is just around the corner. The environment is very competitive, and this will force RIMM to further reduce its price in this quarter and the next few quarters to gain or maintain market share.
4. Out of all smart phone players, RIMM and Palm are in very bad positions since they are very small, and only a few products. But Palm got 2B market cap and RIMM got 25B. So it's easy for major player to buy Palm and leave RIMM in the dust.
5. I see in 2-5 years, when RIMM falls into Palm's current position (less than 5B-10B market cap), then itself can be bought by others. I don't see it can survive in the long run.