Critical Week

Yes, I am still short...and right now it hurts. However, I have not changed my opinion about the stock market. As a matter of fact, I am more bearish now than ever. I am not suggesting the average investor short stocks. This is a very risky strategy. But unless you have a 20+ year time horizon, you should avoid them altogether, at least for now. After the next downturn, you will be able to buy some large blue chip dividend paying stocks VERY cheap.

I have no doubt that this rally is being driven by traders and the same very large banks that were bailed out by us, the taxpayers.

The stocks that are dragging the indexes up are trading at very high multiples. Salesforce.com (CRM) is an example. Also, look into GMCR, NFLX, PCLN, and SHLD.

The headline reason for today's rally? Home builder sentiment is better than expected. Seriously? I mean, home builders feel better about things, so that means you should by stocks. A few components driving the Dow: Home Depot (16.4 p/e), Alcoa (39.69 p/e), CAT (p/e 29.3).

Oh, and the NBER (National Bureau of Economic Research) says the Recession is over...so it must be.

This is a very important week for traders. I believe market direction will change dramatically in the next few days.