I agree Fixator - I think we will have the Obama "hope" rally...

I agree Fixator - I think we will have the Obama "hope" rally for 3-6 months then the "back to reality" fall. If Obama doesn't get in I don't think the "hope" rally will pan out so well.

I think the key over this period is to be nimble and set tight stops. I don't think this is one for the long haul, but might provide some short term opportunities.

As for why it is dangerous to go long here, consider this.

Firstly, the fundamentals are bad. Yes, the FED and government interventions might work, but they haven't helped so far and I don't believe that intervention and centralization is more efficient than the market especially in a debt induced bear market. The bear is simply too powerful here.

Secondly, let us assume that the Bear market started its fall at the level 100 and it will ultimately get to 20. Not a ridiculous statement if you look at 1929 or Japan 1990.

We are currently around the level 50. It looks cheap so those cashed up move all in with a buy and hold strategy no matter what.

The market goes up a bit then stutters back down on its path to 20.

Those in at the top have lost 80% (100->20)

Those who get in at the half way mark loose 60% (50->20)

What looked cheap at 50 is actually still horrible - if I lost 60% I would be just as upset as if I had lost 80%. At the very least at this point if you are cashed, dollar average in on the way down.

One bearish site I read (http://market-ticker.denninger.net/) recommends getting in when the 20 Week Simple Moving Average (SMA) crosses above the 50 Week SMA and getting out when the 20 week SMA crosses below the 50 Week SMA. If you have a look over time, this has been a reasonably reliable bottom indicator for those looking at medium term trends and are not technical players by nature. You wont pick the absolute bottom, missing around 10% of the up swing, but it is better than getting caught 60% down.

Don't take my advice though because I am more of a buy and hold guy. This period is the hardest for me because it could be the mother of all opportunities or it could be the mother of all traps hence I am planning on taking this advice and being a little more proactive with my trades. I would be interested to hear more experienced traders opinions.