Short Market: Increased Position

A strong ISM number, falling oil prices, some positive manufacturing numbers in Euroland, a strong Euroland rally yesterday (when the U.S. markets were closed), short covering, and the general bullishness of the market are driving stocks higher today. I'm just not buying it. I see too many negatives in the economy (even before Katrina the problems were mounting and the impact of Katrina is not well understood at this point, including impacts on the natural environment in the Gulf from all the toxic waste from damaged oil and chemical facilities plus) and the strong consumer and housing markets floating on hot credit that is over reaching the capacity of consumers to repay. A lot can go wrong, not much can go right (that isn't already baked in the market cake). In a best case scenario, strong global growth continues, oil and other commodity prices continue on an up trend, U.S. treasury prices resume their decline, and the U.S. dollar becomes relatively less attractive. In that best case scenario, current P/E ratios contract as the P falls faster than any rise in the E. I'm using today's rally to increase my short position against the market (in this case by shorting the NASDAQ 100). See my earlier post titled Short Market/Short Oil (22 August).