Yesterday, I said;

"In order for a market to end its current correction cycle, we need to see a large sell-off intra-day and a large rally on high volume into the close."

"Today, a perfect scenario for a washout would occur if the Dow Jones Industrials sold off to around the 12,500 mark, reversed, and rallied sharply into the close. This would set the stage for a major year-end rally."

Well, we never got the washout, or capitulation that I was looking for. This tells me that the current rally we are witnessing is being driven by short covering. These rallies could be very violent on the upside, and provide enough buying power to drive the major market averages back near their highs for the year.

Most short covering rallies are mysteriously induced by what is now known as the "Plunge Protection Team”, also known as Executive Order 12631- Working Group on Financial Markets, signed into law by President Reagan after the 1987 market crash. Given all the negativity surrounding write downs for bad loans, and the popping of the credit market and real estate bubble, something had to be done to avoid a major sell-off.

Yesterday, large buy orders hit the market between 3:00-3:30 ET. These orders were big enough to get the attention of short sellers, and drive some cash off the sidelines as well.

This morning we are seeing some follow-through buying which adds to our conviction that this short-covering rally could be good for a 1000 point pop.

Hopefully, we will get enough follow-through into December to drive the Dow back to 14,000, and the S&P back to 1525. At these levels, we will adjust our allocation models down by 5-10%. Since I believe the economy will weaken further in 2008, I don't believe Monday's sell-off was "a market bottom".

Being a contrarian, I read an interesting article this morning. The Food Network said today that the show of Emeril Lagasse's, "Emeril Live" will be taken off the air. A few years ago, my wife an I enjoyed watching Emeril, and were fascinated with his cooking.

While walking through a department store before Christmas, I noticed Emeril cookware, seasonings, and just about anything else you can imagine. When I began to see the Food Network and merchandisers attempt to profit from Emeril's cult following, I told my wife "If Emeril was a stock, I would be shorting him right now". My instincts would have been right.

I had a good teacher by the way. One day, just after September 11th, I was talking with famed investor Jim Rogers. Jim made an astute observation when he said that "patriotism peaked on September the 12th". How's that for being a contrarian? I thought this was a very keen observation.

Here are a few contrarian thoughts;

1) The Dollar- the news is so bad, it is due for a sharp rally. Longer term, not ok. Look for our politicians to begin telling us that merging our currency with Mexico and Canada to form a new currency called the Amero will solve our currency problems (2-5 years from now). This is all part of the NAFTA con-job on the American people. Tune into Glenn Beck and Lou Dobbs for more info.