As regular readers are aware I have been rather bearish during the recent rally. I have short positions still open and this may have clouded my judgement but I still firmly believe this is a bear market rally and recent corrections seem to be affirming this. Following the huge percentage rises on the S&P and DOW I was fully expecting the FTSE 100 to push up to 4,680 but caution prevailed and 4,500 provided good resistance.

The battle for 4,400 lasted allot longer than I had anticipated causing a little stress as my concern was this really could go sideways for a long duration. Whilst investor’s exuberant enthusiasm seemed to have no end the underlying fundamentals have not improved as much as the equity markets would like to believe. The ambitious V shaped recovery play seemed doomed from the offset but stubborn, naive or fool hearty investors ploughed into stocks, commodities and anything else going.

Banks and financials have had a roaring success. My personal feeling is that the US treasury couldn’t finance more debt and has had a hand in propping up markets with actions and propaganda. The main goal was to allow the refinancing of banks under the premise that they were now sound following the infamous stress tests. I personally don’t believe this for a second but I’m a designer not an accountant. The huge leverage and mounting defaults in credit cards along with commercial property losses could see the banks going back for help mid 2010. This is slightly ironic considering the stampede to repay TARP funds.

On the equity side of things some value stock pose a good investment. I bought Microsoft and Coca Cola shares at the March lows and sold them in the recent rally. My belief is that the rally is six months premature and we may even test the March lows. Some stocks will obviously fair better than others. The notion that Tech stocks will lead us back from the brink is ridiculous. A new iPhone at $299 is a great deal but the huge contract fee and add on costs make this a luxury product in a declining market. Penalising existing iPhone users by charging them more to upgrade seems counter productive and the Apple share price rise to $145 seemed ridiculous. Google and Microsoft are other candidates in the questionable equity rises although I’m still bullish on Microsoft above $20 and will re buy near these levels. Tech seems very reliant on consumer confidence and spending which I feel will all but dry up come December 2009. My predictions are for a black December but I still hold my previous prediction of FTSE 100 closing at 4,400 at year end.

Gold is something that has spiked my interest and above $880 I think it’s a good deal. I have looked at ETFs and mining stocks but you can’t beat the real thing. For me gold would be a long 5 year trade with an expectation of gold attempting a push at $2000 in mid 2011 as inflation soars. Buying coins or bullion requires a substantial investment but at $880 to $900 I think I’m prepared to make that investment.

My view in the intermediate term hasn’t changed and I’m still bearish but I believe the battle for 4,400 on the FTSE 100 isn’t over but the trend lines are now starting to point down. 4,000 is my exit target and after that I think I will be re evaluating my trading strategy. Over the last few weeks I have been analysing my trading and gave myself a nice D- rating. I have a long way to go in the quest to become a good trader.

As for the new website it is still being designed and I’m eagerly awaiting the arrival of my first son which is my all consuming focus at the moment. I’m fairly active on twitter so feel free to drop me a message.

“A man must believe in himself and his judgement if he expects to make a living at this game.” Jesse Livermore