"Perhaps a short term top in the much publicized price of crude could be the bulls' excuse. Failing that, some other spin du jour may present itself. The bulls simply need an excuse, any excuse." - From 'Wedgie' 8/26/05

I do not want to trivialize the massive disaster that was visited upon the Gulf Coast region and has affected virtually every corner of the USA. Other commentators have thoroughly explored the potential and probable effects of Hurricane Katrina. I will simply stay with my theme that was put forth as the killer storm was preparing itself to make landfall.

"I have put in a sell on my Rydex 200% inverse Dow fund after having sold my QQQQ and SPY puts previously. I do not feel comfortable at the moment being short these indexes. If I miss the big ride to short heaven, so be it. My humble profit is booked. Greed kills and absolute greed kills absolutely..."

This was not simply gut feeling. Several indicators implied the shorts may have been getting a bit confident and that is never a healthy condition for any bear who wants to remain off the endangered species list. The bulls have gotten their "spin du jour" in the form of an event-driven short term top in oil, some lunatic spin about the disaster actually stimulating the economy and best of all for an inflation-fueled stock market, the "hope" that the Fed will lay off the rate hikes. One spin du jour, comin' up!

An updated look at the same charts presented in Wedgie, starting with the S&P 500's miraculous (not) rebound against all odds (not) from its bullish falling wedge:

This mess actually tried to break down from the wedge and through the first support level noted, but bullish hope and greed are not forces to be trifled with.

With the Dow as well, the shorts have gone from licking their chops looking down to licking their wounds, looking up:

Just what became of that rising wedge noted in the VIX chart?

Well, let's just say that everything remains in tune. The VIX dumped out of the bearish rising wedge right on cue.

Finally, the Put/Call Ratio flashed the shorts a red alert that at least a short term bottom might well be at hand as the 20DMA approached the 1.00 level where a previous strong rally had launched from.

I have begun thinking about re-taking a few short positions, but would like to sit back and evaluate the painful proceedings as the bulls and bears fight it out in the short term.

Truth be told, I would rather tend a portfolio of gold miners and a couple alternative energy stocks and continue finding relatively safe destinations for other funds. This is not brain surgery. Quality global bonds paying 4% plus dividends, "safer" foreign government debt, US Treasury money market funds paying 2.75% plus, select domestic and foreign equities and of course gold and silver investments should keep an investor in good stead.

But modern Wall Street is nothing if not a game, a casino. In so far as you wish to play in this casino, at least do it intelligently and when the odds are in your favor. Yes, this is an "I told ya so" piece. Monitoring the greed and fear impulses are absolutely vital in this racket.