My limit order to sell SDS(90.57 -4.88 -5.11%, ) at 110 got fulfilled today. I set another one to sell more if it reaches 115 and buy some when it hits 90.

CNBC’s Maria Baltiromo interviews Dan Niles about where we’re headed: http://www.cnbc.com/id/15840232?video=920184724

Bottom line: Q1 numbers will be very bad as unemployment rate rises and consumer spending declines.

A lot of people believe that we’ve seen the bottom.

Maybe, maybe not.

What I do know is that the bear is still around. We might not see crazy declines like what we had in October, but the economy is still too messed up for the market to turn around.

We will see more short term rallies, but the big trend will still be heading south for the next few months or maybe even for the entire year in 2009.

Unemployment rate continues to climb which cause further slow down in consumer spending this holiday season  and early next year.

I will stick to my plan to trade the  SDS(90.57 -4.88 -5.11%, ) as I discussed in the previous entry.

Mr. Market is depressed. Stock prices are ridiculously cheap and seems like they’ll keep plunging.

We all can smell fear in the air and the media are making things even worse by exagerating bad news.

The economy is clearly hurting and even the politicans can’t deny this anymore. They say that this will last for at least a year. These are the politicans who would normally deny such negative fact.

It’s very clear then what we need to do is to short the market.

In the next few weeks or even months, as long as fear is in the air (as long as the [[^VIX]] is above 30), just play the SDS(90.57 -4.88 -5.11%, ). Buy when the market bounces (unfounded euphoria) and sell as it goes back to its depression.

My target buy price for SDS(90.57 -4.88 -5.11%, ) is 90. I will sell when it hits 105 and again when it hits 115.

The Dow reached below 8500 today. That’s a bottom! I’m getting in on Monday.

I heard a colleague said that today.

Yes, there’s a good chance for a rally next week because:

1. The market dropped so much this week, so it’s bound to bounce and like my colleague, there are people who think that this is the bottom
2. Since the bailout didn’t help improve market confidence, which we see in the continued sellout, the government will need to do something else to restore confidence in the financial system

That said, I don’t think we hit the bottom today because the credit market is still messed up. Nothing is fixed yet and we haven’t experienced the impact of problem completely.

What will happen in the near future (months to come)?

1. More financial institutions will fail
2. Lower consumer spending will intensify the fear and bring down the market
3. More companies that rely on credit will fail

Listen to what people are saying next week. When you start hearing people proclaim that the market has turned around, it’s a good time to get in…on the short side, because it’s an unfounded euphoria.

I’d watch this market emotion carefully and get ready to buy some SKF(135.00 -15.35 -10.21%, ) and SDS(90.57 -4.88 -5.11%, )