Deflationary pressure still strong.

Deflation is being caused by a collapse of collateral values. Banks are hoarding money. Countrywide is offering 5.5% on CD's because they need the deposits. The credit crunch is still crushing the life out of the system, albeit a little more slowly than last week.

As long as deflationary pressure remains strong, I will be short equities. This gives me a maximum position in cash. In other words, being short equities is essentially the same as leveraging a cash position. It allows me to carry more cash in my account than I could if I was 100% in cash. My actual cash position is 166% of my total account value. I'm not sure how to calculate the leverage on cash of put options, so these aren't counted.