Much mention has been made by several people Belkin, Russel and probably others that I've not seen, about the decline in M-3. I was just wondering, and so does Russel in his latest post on 321 gold, why in an election year would the Bush administration take a chance of the market dropping and the business cycle slowing down by tightening money supply? Does anyone consider Bush that dumb specially when it comes to his re-election. I don't think I do. One more reason I felt that I wanted to stay long the market as long as it stayed above the 50 DMA. They have done a very good job of engineering a recovery right before elections even though the war thing has pretty much blowup in their face. I don't believe their going to blow it now.

Gary

Gary, are you long or short the market? It sound like you're long. Or maybe you're saying that you're short but you would like to be long. If that's the case I have a suggestion. If I were short the market but I would rather be long the market, I would cover my shorts and go long. Pretty simple, huh?

Larry

Larry,
I am following my strategy that I posted the other day. I sold my shorts and bought the QQQ at about the 35.50 level. I will stay long until the QQQ closes below the 50 DMA. At that point I will switch to short again. If it closes back above the 50 dma I will go back to long. If the QQQ closes below the 100 dma I may start to use a small amount of leverage. Of course if the COT switches then I will just stay long.

Gary

Gary,

Okay. For some reason I was under the impression that you were just proposing that strategy. I hadn’t realized that you had actually done it. That’s good! It looks like it’s going great for you so far. Now that I know what you’re doing I’m going to hold your feet to the fire and encourage you to stick with your plan. Maybe you shouldn’t have told me.

Larry

Larry,
My feet were feeling warm now I know why. I really do think the COT system is a great strategy and I'm ready to jump back on the short side as soon as we get confirmation. In the meantime if I can make a little money on the long side or keep my drawdown to 0 from this point on I'll be happy.

Gary