Many people have written me about this, so I wanted to provide some basic information:
You may have heard or seen the bill that's now in the House of Representatives which proposes to place a 1/4% transaction tax (a stamp tax) on every trade you do. That means it will cost you 1/2% round trip to do a trade.

The writers of the bill state it will pay off a good amount of TARP and also the income will be used to fund some health initiatives.
Obviously if this bill is passed, its game over for active trading, the exchanges (especially the CME) and many of the online brokerage firms who rely upon trading volume to grow their businesses. This bill if passed will cause serious damage to the financial markets.
The bill is beginning to catch some headwind as its fashionable, but in my opinion it won't pass. Here's why.

1. The bill was written by people who had nothing to do with the current stimulus bill.

2. As I understand this, this would eventually get past Senator Charles Schumer from New York. Without me passing judgment, he has fairly close ties to the financial markets industry and understands the devastation this will do to his constituents in New York.

3. Our President is from Chicago, the trading derivatives capital of the world. I'm sure he better understands how much damage this bill will cause.

Most large problems usually start as small problems and its best to attack problems when they're first small. This one is small right now and can be eliminated early. Here is the link to the Petition to block the Traders Tax Bill. After you sign it, please send this to as many of your friends in the industry that you know. The petition was just recently put up and already nearly 30,000 people have signed it. The more people who sign this, the better.

http://www.rallycongress.com/no2tradertax/1536/

These days, with so much angst about, people adore more than ever those little nuggets of wisdom for comfort and guidance. There are a handful of trading sayings that I like, but a few of them really get my panties in a bunch. Here are a few:

"Bulls make money. Bears make money. Pigs get slaughtered." – In addition to disliking the violent imagery of this saying, I think it's useless. I guess what's trying to be expressed here is simply "don't be greedy." But the fact is that bulls and bears don't, as a whole, make money. Most traders lose money. Especially these days. The notion that everyone takes cash out of the market except those so selfish that they overstay their welcome is patently absurd.

"Never let a winner turn into a loser." -Again, not true. This black-and-white thinking is deadly. Let's say I short a stock, and it goes to a $500 profit. Then it is heading back to breakeven. I should cover the position at once, right? Of course not! This position could go to a $10,000 profit for all I know. I should cover if the initial basis for my decision is violated. Period.

"You can't go broke taking profits." – I guess if a person takes only profits and never losses this is true. But this is just a perversion – – – similar to saying "cut your winners short and let your losers run." The eagerness to take profits is the main reason that 99.9% of those who trade never make really big money. Because profits feel good. But hedonism and trading are a bad combination.

As for the /ES, I only derived modest profits from the big rise today (I just can't get excited about going long at these stages, but congratulations to those that did). I had some SSO good for a few thousand bucks, and some /ES too. I am short the /ES now at 774 with a stop at 776, and I think I'll take profits anywhere around 756 or so.

G'nite.

Has the following ever happened to you? – – You are speaking with someone, and every time you start to speak, he speaks. You both stop. Then you both start to try to speak again, only to stop again. It is, at once, annoying and amusing. Sometimes the same thing happens when you're at an intersection, and someone else is at the same 4-way stop, and the two of you keep inching forward, urging the other to go.

By and large, humans are in synch with each other. We can carry on rapid-fire conversations with the ease and grace of a good tennis match. But once in a great while, we encounter a person who, for whatever reason, is completely "in-phase" with us (in a bad way!) and with whom a normal conversation seems impossible.

It's that way with the market. My desire is to be "in synch" with it. If the market is up, and you have a bad day – – – and then the market is down, and you have another bad day – – it's a miserable feeling.

A day like today is quite the opposite. Because here's the remarkable set of facts:

1. I entered today 100% short. Not 99%. 100%. One. Hundred. Percent.
2. And I'm making fat profits!

How is this possible? Because (a) I harvested my profits on any positions I felt had petered out, and luckily I did so before the rally really kicked in; (b) more importantly, I had precious metal shorts up the yin-yang, and gold just took a big ol' dump today. I got rid of about 50 positions, so the quantity of entries I have in MarketMatrix has gone from ridiculous to just silly.

This is a good feeling. I'm in synch. And I want to stay in synch.

As a side note, once the /ES rallied back to 774, I shorted the it like mad. We'll see if Obama's speech tonight confirms the usefulness of the patented EZ Investment Guide.

Shazam.

The good news, for bears, about today's rally is that it will:

1. Get us away from the "an 8th lower close is almost impossible" crowd, by virtue of closing up for the day; and
2. Provide some relief on some very oversold conditions.

I am de-lighted with my precious metal shorts today.

My puts on XLU have been – – as Garett Morris' character on SNL used to say – – "veddy veddy good to me." But I've been tightening stops and taking some profits today. One of these positions on which I am taking profits is XLU, which I will re-enter at a more favorable time.