With only the agriculture and energy complexes appearing to work,
and with the financials continuing to trade down, I'm continuing to
position myself for a sideways or bearish market for the rest of the
summer.

As we come close to retesting the March lows of the
DJIA and SPX, I felt that last Friday's sell-off was nowhere near as
brutal as the March sell-off surrounding the panic that was Bear
Stearns.  Only this time, the story was contagion.  First the money
seller banks sell off, then the regionals follow.  Investors have kept
trying to call the bottom in financials - only to see more downside. 
Each bounce is being sold.

On the commodity side, I'm still
bullish agriculture and natural gas and iron ore (over crude and gold).
Bunge's sell-off after its acquisition of Corn Products is a little
troubling, but Potash and Mosaic both held up ok, and Corn Products is
less of a pure play on agricultre - and more of a processor of grain
products (like Archer Daniels).  I'd say it's a less attractive part of
the value chain, especially as raw input costs rise, the ability to
pass on the costs and maintain margin is difficult.  Who is to say that
sugar refineries won't get their margins compressed similar to the
crack spread compression faced by the oil refineries like TSO and VLO. 
Plus, Bunge paid a big premium, so it wasn't surprising that the
buyer's stock sold off on the news.

I still feel Potash and Mosaic need to get bought on any
pullback.  Actually, I feel like Mosaic is getting close (would buy in
the low 140s).

And Deere looks interesting at these prices, too.

Here's what I traded today:

Shorts -

Shorted
Conagra ahead of Thursday's earnings.  All food stocks have been
feeling the pressure of rising inputs - pork (Smithfield), poultry
(Pilgrim's Pride), Jams (JM Smuckers) - so I think Conagra will have a
hard time this earnings period and offering guidance moving forward.

Shorted Big Lots - retailer has had a big run, lots of insider selling.  The only retailers I'd own today are Walmart or Costco.

Shorted Hanes Brands - cotton prices are running, commodity product, high debt

Shorted
Oracle - bearish on enterprise IT spending, with financials continuing
to break down, retailers in pain.  The countervailing trend is
international demand (IBM posted good numbers last quarter), but I'm
still on the bear side here.

Shorted Ryder - transports
performance diverging from the indices is a little strange here. 
Transport theory suggests that the market will turn when the transports
are performing (as volumes precede the economic turn).  Still, I feel
this is a head fake.  High oil prices definitely squeeze the margin of
trucking.  I'd rather own the rails.  Though they are impacted by fuel
prices, it's a more efficient mode of travel.  And trucks are more
levered to shipping consumer stuff in declining demand (apparel,
electronics) while rails ship the stuff that world needs (grains, coal).

Buys -

Still
buying industrials, energy and metals  - Gardner Denver, EOG Resources,
Cabot Oil and Gas (Secondary priced and stock is still trading higher),
Companhia Siderurgica Nacional, Precision Castparts

Bought an
ultrashort on the Lehman 7-10 year treasury index.  Fed meeting this
week, and fed is in a bind.  4.15% yield on the 10-year to me is a
joke, with spiraling costs in oil, gas, food.   The ECB has been
uber-hawkish on rates, trying to  defend against inflation, while the
Fed has been uber-accomodating in an effort to rescue the domestic
markets and the economy.  Seems to me a bad situation - as we continue
to need to print paper to fund our war in Iraq, our broken health care
system and our insatiable demand for driving SUVs (actually - this may
possibly wane with $4 gas), and yet we want creditors to fund all this
with 4.15% paper.  Seriously?