Calls for the bottom are in. I’ll get to why I disagree with that in a moment (and why I might be wrong). I took some money off the table yesterday (sold some puts). I did not reverse position. I am extremely well hedged right now. That’s another way of saying that I made no money on today’s up open. I only have one bet on right now, as of a half hour ago, and that is a strangle. I do anticipate some big move in the near future, but am not willing to bet one way or the other today. I’m cash rich, though, so that may change.

Now, why don’t I think the bottom is in? I think de-leveraging has a way to go. There’s an overhang of the derivatives market, and everyone is still addicted to credit. Housing prices are falling, which will continue to act as a drive against the consumer. Our economy is still too focused on the consumer. That won’t change overnight. Consumer confidence is still stronger than is rational. I’d look for a bearish consumer confidence reading to mark the bottom (that’s not my favored indicator, but I am looking for contrarian indicators).

So, why would I be wrong? The market was extremely bearish yesterday. The VIX (implied volatility index) hit a high that is associated with extreme pessimism. Extreme pessimism is a contrarian indicator. Also, the market predicts bottoms in the economy fairly well. So if the economy bottom is this side of six months, the market may have nailed it.

I’m still bearish, so I will be buying puts into rallies, but probably not as much as prior.

Incidentally, if you have a time horizon of 15 years or more, now is a pretty good spot to start investing in things like SPY. Even if the bottom isn’t in, and there’s a better time to buy, the market is much more reasonably priced than it was last year. However, I’d make certain you really have a 15 year time horizon. If you don’t have six months of living expenses saved up, cash is a pretty good thing to have.