I admit to confustion

Right now, I am confused about the market's direction. Today, at least, the bad news was focused mainly on unemployment which is primarily a backward looking indicator, despite the fact that layoff announcements happen prior to the fact.

The ISM service sector data showed continuing decline, but with a better than expected reading, showing a slowdown in the steepness of the decline.

Here are a few of the interesting stories out there. First of all, more vehicles were sold in China than the US in December. This begs the question, "is China's economy as bad as I think it is?" Has the US market been beaten down much more than is warranted? Lending by Chinese banks reportedly surged in January. The loans were for railroads and other projects. Perhaps the stimulus is more than window dressing after all.

Also, the Baltic Dry Index has made a convincing bottom, doubling off its lows of 650 to over 1300 today. It is time to buy a virtually debt free company like Diana Shipping (DSX)? Unfortunately, they suspended their dividend to take advantage of "opportunities" that may arise. The also bought back 10% of their stock below current levels.

Rail shipping in the US is down, but the the different sectors vary widely. Autos: -65%, coal -2%. Has the recession reached it's limits in utilities? Is it time to buy Peabody Energy (BTU)? Or maybe CONSOL Energy (CNX) which has less debt leverage.

Has oil bottomed? Is it time to buy Exxon (XOM) with their 0.08% debt to equity level and $40 billion cash warchest?

I really don't know right now. So, I think it's time to cut back on some of my shorts. I'm looking at closing the Euro ultrashort and also KB Homes. Both have been pretty volatile lately. I also need to do some risk assesment/allocation management, as I just transferred my student loans into the account, increasing it by about 40%. So that takes a bite out of a lot of my risk right there, at least percentage-wise. COF is now only 1% of my portfolio. It's time to close it, as it's just too small to make a difference profit-wise. I'm probably just holding on to it going lower more as an ego thing to post a more impressive looking number on the profits board.

I think I'll wait with EUO for the ECB to make their next decision on interest rates. If they cut more than expected, the Euro will have a nice little dip to trade on. Looking at KBH again, they're up 15% over book value. They don't get much benefit from the stimulus bill. I also have this notion that the stimulus bill is pretty much priced in about now. I saw a nice chart yesterday that showed the stimulus adding 4% annualized growth to GDP in Q's 3&4 of this year.

Crap. Now I'm convincing myself to wait a little longer. Well, this story about Mexico's central bank intervening to stop the Peso from dropping through record lows shows that there are still a lot of hidden time bombs to go off yet. I'll just keep waiting for the next big one.