dodged a bullet!

So I sold my puts on BA and CYMI yesterday (for gains of 114% in two weeks, and 33% in three days, if you don't mind my tooting my own horn...), as I had predicted an end to the correction for a few days. Well, the market continued to slide, but look at what BA did today... currently up over 4 points! Yeesh. Dodged a bullet there.

The market is now up 60 points, and steady. The Fed meets June 29th, and we can expect a bit more downside over the next two weeks. Inflationary data came in at 0.3%, vs. the expected 0.2%. Seems the smart money is on a .25% hike on the Fed rates, with an outside shot at .5%. Nobody knows what to expect with Bernanke, but there is some fear that he'll shoot for .5% if the numbers keep looking inflationary, since he might be trying to prove his inflationary fighting zeal. Smart money is still on .25%, but we'll see I suppose.

Either way, I'm looking for a bit more of a bounce, perhaps as much as 200 points on the high end for the Dow, though I think the NASDAQ is wrecked for awhile. After that, I expect more downside.

One cautionary note: the S&P 500's current P/E ratio is at its lowest point since 1995, so this market is NOT overvalued. This bear may be a mild one, so keep your eyes open. The problem with this market is government spending, not corporate idiocy. If new treasury secretary Paulson inspires some conservative vigor in spending cuts and fiscal dicipline, this market sould move forward in short order.

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