7/30T1:35 Martket comments

Today the U.S gov't signed into law the rescue package for FMN & FRE. With the Bush signature I believe the counter trend rally we have had to endure has peaked. Financial stocks hit highs this morning on the announcement of the signature accompanied by a Bush speech. As of this writing the stocks are reversing and trading at the lows of today.

It was my belief a week and a half ago that this rally would last until the bill was passed. Now, if we believe that the gov't manipulates the markets and can cause rallies when necessary to further the agenda, I submit to you the reader that the manipulation is now over for the time being. The rally in the equity markets and the sell off in oil has allowed for Paulson to get a blank check from congress and it has bought some breathing room for Bernanke. The absolutely ridiculous notion that the Fed would raise rates is now off the table because oil has declined.

I find it not surprising in the least that oil is trading up 3% at this moment. The inventory numbers this morning were mixed but we see a surge off the lows for oil, why? Simple, the need to suppress oil has been replaced with the need for oil to recover. Oil was suppressed right in front of the Aug. 6th Fed meeting on rates, but now the Bush administration wants to push the offshore drilling bill down the throats of congress and can't do that if oil continues to fall.

Of course, Gold and Silver are in the same boat as Oil and that means that we saw the bottom in both commodities this morning. In fact, silver has already reversed and gold is in the process.

The time has come to act in the portfolio.:

We need to begin to rebuild the short positions in the Financial space. I want to have a third of our total short position on today in the Financial ETFs RKH, IAI and IYG and the idea will be to add to these positions on any rallies in the mornings.

We need to reestablish our GLD and SLV positions and perhaps add a little to CEF and RGLD.

We may also add some individual short ideas where we see fit.

BIDU: I want to build this position over time. Even if the markets sell off I want to add to BIDU as it comes back down to its 50 Day ma. Put simply, there is no better chart pattern in the whole universe of stocks. This is a perfect cup/handle on a weekly scale. The companies EPS continue to outperform with 4 quarters of 80%+ growth with the most recent Q the biggest in the last 4 with 118%. If we can't make money in this idea over the last 5 month of the year than there is no reason to trade any other growth stocks from the long side. This trade will be my "cannery in the coal mine." I will stop the position out if the price closes below the 200 day ma.