Analysts who try to call tops and bottoms are a pet peeve of mine. No law of the universe prevents the Dow Jones Industrial Average from going to 5,000. It's around 9,000 now. It's been as low as 7,773 recently, after peaking at 14,279.96 last fall. Who knows where it'll be next week or next year? 

I’m cautious on the overall market. Don't let the market fool you. No trader in his right mind would carry a position overnight. There's just too much risk of complete gaps up or down the next morning.

Skeptical as I am that bottoms feel anywhere near this good, I’m reveling in the extraordinary bargains available today…. many in the greatest companies of the world.

But then, stocks that are dirt-cheap could become more dirt-cheap.  



As hedge funds and investment banks racked up losses, faced redemptions, and had their credit lines pulled, they sold commodities, including precious metals. This was particularly damaging to silver, which became uncoupled from gold. My bet is as November begins and hedge-fund redemptions are completed, silver will rally.



For the statistically inclined the mean gold-to-silver ratio over the last five years is 59 – using monthly samples – with a standard deviation of 8.7.

Recently, the gold/silver ratio hit 80, the highest it has been in more than five years – nearly 2.5 standard deviations from the mean. If there's a "snap back" rally in commodities, silver ought to soar.
 It now takes more than 80 ounces of silver to buy one ounce of gold. That ratio is quite high compared to historic standards – and compared to where it was just two months ago. I like the idea of buying silver here. I also like the silver stocks.



Last September when the investment banks began to collapse, the CEOs of Lehman and Morgan Stanley vociferously blamed short sellers for their falling share prices. The bankers persuaded the government to ban short selling for about a month in a lame attempt to prop up their insolvent businesses. (The move didn't help. It demonstrated how corrupt our markets are, forced hedged funds out of the financial sector, and sent share prices and investor confidence to new lows. Then, the rule was abandoned.)



Now we have enough data to know whether or not short sellers had anything to do with the declines in Lehman and Morgan Stanley. They didn't. In fact, the short interest on the major investment banks dropped steadily from July. By September, less than 3% of Morgan Stanley's stock was sold short. What caused the massive declines in price? Desperate selling from longtime shareholders – corporate insiders. That is why we have the Insider Buying and Selling report each Tuesday.