The Merrill Lynch chart (above) is fairly self explanatory. We got the official news late yesterday that they are selling their stake in Bloomberg, due to the fact that the rating agencies threatened them with a credit downgrade if they sold their stake in Blackstone (BLK). Considering the market experience this firm has, the decision to sell Bloomberg, which is far and away, the best asset they own, is lunacy of the highest order. Great traders and organizations worth their salt sell their worst assets or divisions and keep the best, under the adage sell your losers and keep your winners.

I realise that when you are under the gun and have to raise cash you must get it done. This transaction tells me all I need to know about the value of all those level 2 and 3 assets? Merrill has on their books. If they were worth anything they would have sold those. My guess is there is NO BID on many of these assets, so they are selling, as Art Cashin would say, what they can sell. I wish them well. Longs would be well served to use this rally to get out. Unfortunately, many will see the rally yesterday and today and vindication of holding their losers, convincing themselves that they were smart to hang on. Truly fascinating the psychology of the capital markets.

I want readers to pay respect to yesterdays rally but view it in context of where we are, a bear market. Whenever you want to panic and cover your shorts, or worse get long, I would counsel you step back, punch up a 1 or 2 year chart, and take a longer term view of whatever it is you are looking at.

For as the greatest speculator of all time Jesse Livermore said in his speculative classic Reminiscences of a Stock Operator, "it was never my thinking that made me the big money, it was my sitting!"

Good speculating to you all and always remember that "an investor is a speculator who made a mistake and will not admit it".