As I write, the Nasdaq is down 2% which makes the short position I took yesterday up 4%. Not bad for a 1 day trade. I will probably try and close out the position today and I might even take the exact opposite position and go long the market for the short term. Why? Did I suddenly become a bull?
No, I'm still negative on the market. But I think at this point, it is good to reverse position for two reason. First, the volatility of the market makes swings more likely. I'm just trying to play the gyration of the market. Downdrafts are followed by upswings because nobody knows which way the market should be moving. Second, I think it is more likely that the Senate will pass the bailout plan tonight. This should cause the market to move up sharply as soon as it happens. I think the senate will do whatever it takes to pass the bill. I think they feel pressure to do something. The problem with this plan is that congress wants to pass something, so they look like they are doing their job. However nobody wants to vote for it because given the overwhelming sentiment against the bill. So congressmen want it to pass, they just don't want to be voting for it. Given the House voted it down, this will probably put additional pressure on the Senators to vote for it.
We will see. Watching the markets closely right now trying to figure out when to close out my position and go the opposite direction.