It was a good day for the Dow with a +161 point gain but it was all short covering at the open and the rest of the day was lacking conviction.

I did not send a newsletter on Wednesday night after the -245 point decline in the Dow. I was pretty sure nobody wanted to go long after that drop. The better than expected economic news produced a significant gap higher on Thursday and any plays I would have profiled on Wednesday night would have gapped higher and left us exposed. We have done that many times before and paid the price.

The lackluster afternoon with a decent dip around 2:PM convinced me Thursday night was also not a good opportunity for entering new plays. With only one day before the weekend filled with plenty of event risk I felt there was still too much danger. Friday is also a quadruple witching expiration.

Late Thursday the UN authorized a no-fly, no-drive action against Libya and Gaddafi warned that his forces would attack any civilian or military target in the Mediterranean if UN forces crossed into Libya or attacked any of his forces. Personally I think he is a loud mouthed buffoon but he probably realizes he is cornered and his days are already numbered regardless of what he does. Therefore he has nothing to lose by striking out. This kind of event risk over the weekend is a challenge to long plays.

Also after the close the G7 meet by teleconference and agreed to intervene in the currency markets to protect the Japanese yen. That has spiked the futures overnight to +13 and it looks like we will get another gap open on Friday. It will be interesting to see if the gains hold until the close.

No recommendations tonight due to the lack of conviction and high volatility.

Jim Brown



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