The strange vertical rally of late has taken out the previous bounce highs and at this point many a wise trader is getting long the high beta stocks here. Personally, I think we should move back to the lows and really thrash some of the momentum names before we can move to eventual new highs. I don’t feel that stimulating the stock market can stimulate the economy anymore — what worked in the distant past doesn’t always work in today’s technocentric society. The world is truly “flat” in a way that it simply wasn’t when these stimulative Phillips Curve programs actually helped Americans. Spending more money is likely not going to help the economy at all because we are reaching a point where the debt of the nation alone is creating economic strife in the US. The banking problems and mortgage issues are stil incredibly pervasive but the European situation also looks extremely dangerous for the financial markets. At this point, we are sticking with cash in the model, which is up some 8% or so since we started blogging about it in early July… At this point we like a larger position in various currencies such as the Canadian Dollar, the Australian Dollar, the Pound, etc… The US Dollar may actually rally for a short time here, but in any event I am in risk off mode here at present for the overall markets but bullish select members of each market’s components.