Sell the next bounce

I'm looking at this market and I've decided to sell the next bounce, perhaps as early as tomorrow.

Analyzing the market according to the principles of reflexivity and self-fulfilling prophecies, we can see that the 60% runup from the lows fits into the category of a self-fulfilling prophecy. So, the question is, can the runup in the market influence the fundamentals in the real economy? Can the runup in the market improve government finances and lower the deficit?

And the answer to both of these is a big "NO!" In fact, the economic fundamentals have responded very anemically to all the government money being thrown at them. To give an example, the US housing market was $6 trillion at the peak in 2006. This year, retail residential real estate transactions will probably total $1.5 trillion. And what's the government spending to keep it from falling further? The Federal Reserve is spending $1.5 trillion. The FHA has increased its mortgage guarantees by $1 trillion. Homeowners are being given tax credits equal to 5% of the price of a median home.

Internationally, Chinese equity markets are back in a bear market. The Japanese economy is suffering from a high Yen. Ireland and the UK recently revealed new bank bailouts. And global trade hasn't recovered.

The dollar is at strong support levels. As everything has gone up, most have not paid attention to the ONE thing that has gone down: the US dollar. So, if the dollar should begin to strengthen, everything will go down. There are a myriad of reasons why the dollar might strengthen. Flight to safety, dollar bouncing off strong support, weakness in commodity demand, shakeups in international trade, a jump in Treasury interest rates, or some unknown factor.

Why move now? First of all, my favorite sources Rosenberg and Winter have been harping on an overvalued stock market and are now making moves. Second, there's just too many signs of a top to ignore: valuations, sentiment, insider selling, and bullishness are at historic highs. Mutual fund sideline cash is at historic lows.

And then there's the small matter of the Fed withdrawing some support to see how the economy stands on its own. I think it keels over.

So, my ideas for shorts are SPY, ANF, RTH, OIL, and KBH.

I've already made a 40% move this week out of gold. So maybe I'll move another 1/2 to 1/3 over on a little bounce. I also like the idea of doing an extra short of the the S&P 500 over the weekend, as any bad or shocking news will probably hurt the market much more than good news here.