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Line is the Sand has been crossed

Wednesday, May 18, 2005 | 12:38 PM

I've been out of pocket most of the day -- I have access to a PC for only 5 minutes -- but the market crossed my triggers, and I have redeployed 10% of my cash raised following my March 29th negative call.

10,400, 1181 and 2000 have all been crossed simulataneously. That's enough to get me to put some of my cash back to work. On the possibility that this is the world's greatest headfake, I am scaling in slowly (10%/20%/30%/40%). On further shows of strength -- or a pullback to support that holds -- I will add to my positions further. (I am still long the previously mentioned TLT position)

I still expect a retest of the lows sooner rather than later. Nor does this change my long term view that there are significant structural problems.

But as Ned Davis asked, "Do you want to be right, or do you want to make money?"

UPDATE May 18, 2005 8:16 pm

I've been reviewing the action today -- volume was modestly better than we've seen the past few days, but hardly impressive. Only the Nasdaq showed a volume increase that could be described as "significant."

I am a big believer in "scaling in" -- I mentioned putting 10% of cash to work today. I'll deploy the next 20% if we pullback to support and hold.

As mentioned earlier in the week, this bounce was not unexpected.

I do not like to rely on my gut, cause that's neither consistent nor quantifiable. Yet there's something here that doesn't quite feel right, and I'm not sure what it is.

Maybe after I dissect the CPI data, I can get a better handle on this. For now, I scaling in slowly . . . .