Now the down trend is back

Market is back its down trend: all major indices broke below the 50MA. Nasdaq was down 0.8% and S&P500 off 0.9%.

1. Bernanke testified before Congress today, clarified a few things, which dashed the hope of a rate cut in the near future. So the market reacted with a quick 140 points drop in the Dow within 20 minutes of his speech.
2. On the other hand, Bernanke still held the view of "moderate growth" in 2007, which I don't agree.
3. I think Fed is out of options now, with a slowing economy heading to recession, and elevated inflation. They can only act if one of them is getting worse. Both cases implies a correction in the market.
4. Today's durable goods order number (+2.5%) was worse than expected, as a matter of fact, the January number was revised downward, from -8.7% to -9.3%. Without the revision, the high line news will be up 0.7%, and market expected 3.5% after the big drop last month.
5. On Feb.27th, the durable orders number was part of the reason market sold off that day. It's one of the leading indicators of the economy.
6. They are weak 4 out of the last 5 months, it shows the economy is running out of steam.
7. Iran's tension with the West dims the hope of a quick drop of the oil price, which can get worse since the summer driving season is just around the corner, and forecast of an active hurricane season doesn't help either. High price of oil will add inflation pressure and reduce consumer spending.

What's the proxy to play this market:

1. From FA perspective, the market may just enter a correction that started on Feb.27th. From TA perspective, as long as major indices remain below 50MA, the next logical path is to 200MA.
2. Ultra short ETFs. I'll use them as a core position in my portfolio.
3. Some speculative plays like RIMM, CFC puts. I may miss the mortgage plays already, since all these shares are significantly lower YTD.
4. I can't add PM shares now, because if the market sell off, they'll go with the market initially, then they'll separate from the general market. Unless dollar is broken down the historic low against major currencies, I don't think PM can significantly out perform market.
5. Uranium play is for long term, not short term, so I'll wait for better entry, just like the PM stocks.