So aside from a potential "stimulus" proposal, the bailouts for America have pretty much come to an end.  India has cut interest rates, Korea spent 100 billion backstopping banks, and Netherlands spent 12 billion to bailout ING.  The risk of bank failures across the world has stopped and things have settled down.

So is it safe to jump into the pool?  With the VIX down to 50 (which is still by all means extremely high) I think this week sets the tone for some reasonable consolidation and chances to accumulate and take advantage of the volatility.

Call Option spreads on commodity related stocks or covered call writing is probably the best thing to do.  Stocks like Potash, Mosaic, Anadarko Petroleum, US Steel, Goldcorp, Cliffs Natural Resources, Freeport McMoran Copper and Gold and National Oilwell Varco are selling at valuations that is plain silly.  Call options are still trading at prices reflecting high beta.  So for a stock like POT, buy the 80 call and sell the 100 call.  For Freeport, buy the stock and sell the out of money call for November and repeat at options ex if necessary.  I think we've seen signs that Hedge Funds are done liquidating these stocks are are beginning to get back in.  But although I don't think we'll see huge moves anytime soon, we may start to see an uptrend after the elevator fall.  If you don't have problems sleeping at night the UYG and UYM is the easiest way to play the potential surge in an IRA account or a long-term hold portfolio.

Stocks like Cisco, Microsoft, Apple, Google and others are compelling bargains but seem to get cheaper and cheaper albeit slowly.  I do not think tech stocks will lead the rebound, it will be commodity stocks.  Tech stocks have always been and continue to be dead money.

To hedge I think shorting retail stocks (after they move up a bit), regional bank stocks (they've been range bound forever) and consumer discretationary (airlines, cruiselines, hotels) will probably work.  I think it's safe to say we have all the pesky "early cycle" investors like Bill Miller, Bill Nygren and Eddie Lampert wounded enough to know that they won't be doing the stupid trade of roaring back into Home Depot, Macy's and Centex Homes. 

We will be having the worst holiday shopping season in modern times, all retailer stocks are fair game for shorting on any mean bounce.

So now that we're officially a socialist country, to be capped off with an Obama presidency...how do you invest for the long term?  Beats me.  We are entering a time where there's too much uncertainty to be in stocks for the long-term and cash is going to worth less and less.  Due to central bank manipulation, Gold will be in a lockbox not allowed to float freely.  Maybe a chance to move to Iceland, take a dip in their world famous geyser pools and spend your incredibly valuable US Dollars while the people holding their worthless Krona are jealous.  Go over to the Netherlands and go wild in their red light district.  Las Vegas hotels are pretty much giving away rooms for free everyday.  Predicting banker or player on the baccarat table is far easier than predicting where the market will move.

I think in the very long-term you have to think inflation will come to bite again...so TIPS and I-Bonds are a better investment than T-Bills, Notes and Bonds.  Or be like me and continue to speculate on the return of $100 oil.  This decade is the "lost decade".  Indexes are far less today than they were when Bush started his presidency.  I personally don't think the next decade will be much better.