The Dow posted a gain for the week, despite having the worst single day sell-off on record. Given that it posted one of the best single day gains as well, that’s not too impressive. Given that it’s the first up week in over a month, it’s not too shabby, either. Overall, the rally failed to materialize (yeah, I blew that call). Nobody knows what Monday will bring. Going into the weekend, nobody wanted a heavy position in anything. Cash is trash, but equities are potentially worse, maybe, perhaps. There’s nothing definitive for anyone except Buffett, apparently. Again, if you have a decent time horizon, there’s no reason not to be buying now.

I missed two trades that would have been instant wins. I missed (by a nickel) a limit order on a call yesterday, and missed a limit order (by a dime) on puts today at the top. I cleaned up on Wednesday’s drop (by luck and because Thursday cooperated), so I don’t feel too bad. While each day was pretty easy to trade, the week was not. Again, my hypothesis of this week starting a sustained, tradable rally was totally wrong. My definition of a tradable rally is one you can make money buying early and selling higher. The spike on this rally was all at the beginning. If you bought into the rally expecting to sell later, you’d be down quite a bit. If you sold the rally (like I said to), you’d be happy, but that doesn’t make my call any more correct.

The economic picture is still pretty gloomy. Factory production cratered. Unemployment is set to rise dramatically higher in the near future (end of December time frame). People are predicting a 50% reduction in hedge fund numbers. That all spells for volatile markets in the future. Many respected people claim the risk of a crash has been reduced. Panic has lessened. While I expect the stock market to bottom before the overall economy (that’s a given), I don’t think we’ve hit bottom. The news is still surprising to the downside (like the production numbers). Google made people happy, but was a hedge fund favorite, so knowing how to play it is impossible.

As hedge funds unwind, I would expect oil to fall and financials to rise, at least relative to each other. The long energy, short financials play seemed almost universal. Of course, since I’m having this idea, it’s likely too late to do anything about it. Still, when we read about someone making big bucks off of collapsing hedge funds, you can say, “Yeah, I read about that being a good trade.”