Short day ahead

I awake this morning to see that the futures are in the toilet (I've been writing this post since early a.m. so who knows what it will be once I hit "publish"). I had only a couple of short positions: DUG and SMN. I closed them yesterday expecting a bounce, and expecting to re-enter. I'm at least glad that I closed out my dog positions. I'm basically all cash. Whichever way this market goes, it will go without me in the next couple of days.

Yesterday the market looked like an acrobatic flyer, though there was nothing elegant about the maneuvers. As I've come to learn, the market seldom conforms to anyone's expectations--yours, mine or opinion makers. I do have a few observations:

• Bear or buying opportunity? There are not many folks calling this market a bear market. Gary K is calling it such, and I've heard two traders on CNBC calling it such. That's 2 in the gaggle of folks paraded around saying that it is a unprecedented buying opportunity. Gary K is fond of saying this: "In a bear market you will get no help from Wall Street." His comment is true, I believe. Crystal ball? Bear markets are like recessions--they are only clear in hindsight. I don't know if it is a bear market or not. However, I suspect that the probability that it is a bear market is greater than the probability that it is not. I'm reminded of Young's excellent book, Five Blind Mice, where many mice are climbing over the elephant and conclude 5 different things based on what each is able to tactilely determine). Same for the market. Once can look at a discrete piece of it and conclude something very different from reality.
  
• Bernanke as Sampson? How funny when Bernanke started and it was perceived that he would be accommodative to Wall Street he was much heralded. Now he is much maligned. From hero to villain. How fickle the emotions of crowds! I suppose that he is Sampson like in his positioning himself between the two pillars of the "Fed Put" and liquidity and is pushing them down. All of the derivative instruments have produced synthetic liquidity that has emasculated the Fed.
  
• The Fed and Dante's Seven Circles of Hell: I think that the Fed will serve as purgatory for these CDO's that need a place to stay and receive a little cleansing and redemption--redemption in the literal and figurative sense. Literally, because the institutions have to redeem this garbage. Ben Bernanke is calling, like in that classic movie, Monty Python and the Holy Grail, "Bring out your dead!". The institutions are slogging through the mud of the credit markets, laboring under the weight of these huge burlaps full of CDO's--some of them dead, and some of them not quite dead yet! Ben takes the load, throws them a few pence and takes the stuff to do penance. Who knows how these institutions are going to repurchase this stuff. But the point of purgatory in the figurative sense (in Leisa-land!) , is that redemption will be found. In time the credit markets will calm down (well, maybe), and the pricing mechanism lubricated so that they start working again without the fear of locking up. At that time (should we live so long to see it!), the institutions can repurchase. The institution's ability to repay will determine how much you and I've purchased with our taxpayer dollars!
• Yankovich on CNBC (bearish trader) is looking for Dow 12K.
  
• Oil: I still expect this price to crash. Much like Dow hitting 14K, oil hitting $100 will be a psychological climax, after which there will be a deflation and a cigarette or two smoked afterward. I think that it is the last flailing of the commodity bull run prior to an intermediate correction--just as we saw happening in the China stocks.