Don't bet against stocks quite yet.

Yesterday, ahead of Obama we took on a couple positions in financials (RF + 4.2%) and in healthcare (UNH + 0.57%). Even into weakness today, I like some of the separation occurring in stocks. It makes me feel better about the idea of loading up again, similar to how we did at the end of October of last year; which was "All in." The October decline versus the January decline are roughly the same in magnitude: Oct (9 days): -6.5% vs. Jan (8 days): -6.3%.

Yesterday we discussed the relevance of $72 dollar crude, and what it meant at those levels. Not only is this a good technical signal on the actual commodity, but this is an important market measure. I have a hard time picturing falling stock prices if crude oil is stable, or better yet, ready to head higher.

I mentioned yesterday I love the spot, and today, I love the price action.

For this reason, I nibbled in the oil service space, and might take down some USO tomorrow.

Copper and Gold also traded well into the close. The Central banks are defending their basis in Gold at 1075, and Copper prices are nailed to trend support, which held today. Both were good sources of relative strength, and should point to stabilization.

Speaking of relative strength, I also am of the opinion that the strength in homebuilders is important. We've been on this theme for weeks, and I think that this is still a great entry point in several of these stocks.

Relative strength, indeed.

Looking back, I get the fact that this is meaningful selling, with plenty of volume behind it. I still am of the opinion that you can start to short stocks, but I don't think you could stumble upon a worse spot. Wait for strength, be patient, and be selective.

Tomorrow I have a long list of stocks to pick from, should the market whisper "buy me,"but I am also looking to initiate a few verticals and or diagonals at these extremes.

Heading into "Mutual Fund Monday" I'd make damn sure you covered your shorts.

OA