XXX,

Difficult markets recently since so volatile. As always use following at your own risk, but as I see it looks like major trends in stocks, currencies (except yen and metals all turing down. Feel could be on verge of major down moves in all these. If SL's in stock indexes turn down in next day or two would set up potentially very bearish patterns and type that could lead to major trend change down and lead to sustained down moves. Same patterns exist in all currencies (except yen) and could produce same thing as in stocks (trend change to downside with following sustained down moves). Safer to wait for turn down in SL's but at moment am short (in anticipation of trend changes) Russell 2000 and NDX. Also bought some VIX futures this AM. If stocks do turn trends down, as feel they will, could see VIX move up over 30.00 and maybe even up to 40.00 level. Since currently trading in 17.00 area (May) and 18.50 area (June) and each point $1K have potential 12K to 20K move per contract in VIX.

In currencies am against trend short C Dollar and long US dollar. Should trends turn down in currencies would have what call best combination for good sized sustained moves since have had long lasting very bearish COT situation (commercials have been heavily short for long time) and so all need is for trends to turn down. Close to getting third lower high in SL in C Dollar at same time ML on solid down cycle.

Grains a little tougher call since have such potentially bullish supply/demand situation and also potentially very bullish weather situation.

Cocoa has potentially very negative pattern.

At moment some of these markets oversold but this can continue for week or more.

At moment ML in silver on super solid down cycle and very difficult to sustain any up move when this case, although moves so big there even a two, three day counter ML cycle up move can be sizable (witness six cent rally of several days ago). However, see decent chance will see July Silver trade below 25.00 within next two, three weeks and maybe even down to 20.00.

Copper situation very bearish since have had "best combination" for good sized, sustained down move there since commercials have been, and still are, heavily net short and recently went concurrent to downside and still is.

So see anticipation shorts in stock indexes and currencies as worthwhile spec. And see risk/reward on long VIX as excellent (this just another way to be short stocks but with much more potential.

If downside right on these "should not" see prices above highs of past couple days so can use those levels as give up points and thes e not too far away and since downside potential very big if do turn trends down all these have quite good risk/reward situations.

Key will be whether can turn SL's down next few days, believe will but doesn't happen til it happens although am willing to bet on anticipation they will (SL's turn down).

Chick

The quote above was sent by my teacher, Chick Goslin. Read at your own discretion.

The past 2 months have been very bad for me, both in terms of equity swings, and a seemingly lost mind. In terms of money, the losses I made has been the worst of my life. Naturally, it affected my mind very much, causing all sorts of internal turmoil. It started me thinking, have I made money based on pure luck? Did I manage to make money just because I was a bull in a bullish market? Or did my 6 years of experience actually taught me something. Up till now, I am still figuring. Needless to say, there is only one way to find out. I must clear my mind of all doubts and carry on through with my methods.

I used to think I was flexible, that I could reverse my positions on an inkling. Reading the email above, I realize that I was desperately clinging on to a trend that might have turned. Whether it really turns or not, is another question. But definitely, the signs are there that shows either I should be starting to test the downside, OR, stay out of the market. This is no time to be stubborn.

I have my eyes open now, and will be posting a detailed analysis today of the markets.