You Gotta Believe to Stay in This Market

Jeff Berkowitz's making sure he has conviction in his longs and feels secure about his shorts.
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Sometimes getting ready for today means looking back at the day before.

3:30 p.m.

: zzzzzzzzzzzz. Slow, slow, slow. Very quiet, very illiquid day. Having a nice day, may sneak out early tonight to get more time in with my kid. Watching the dollar/yen relationship closely but not doing much else.

Then smack! Market gets walloped in a matter of minutes. Yes, the dollar's rally failed, but the yen was strong all day. The underlying technicals were weak throughout the day, but we were still hanging in there despite the pressure from the dollar. My best guess is we had a weak, light-volume day and a sell program exacerbated the downward move.

Everybody will point to the dollar/yen or ascribe the selloff to profit-taking. To me, profit-taking is a term used to describe a selloff when one can't explain the true cause.

Despite an article suggesting that

Sequent

(SQNT)

, scheduled to be bought by

IBM

(IBM) - Get Report

, was inflating revenue figures, I would still argue that the 4-plus-point drop in IBM in only a few minutes points to a program. A program that compounded the fears of a rapid dollar decline against the yen.

So what am I doing in terms of trading? Not much. Last time I checked, I didn't have tremendous insight into whether the U.S. and Japan might intervene. I was drinking buddies with

Sakakibara

and

Rubin

, but these new guys ... well I have no rapport with them. So I recognize my limitations, realizing that a weak dollar, in front of the

Fed

on a late August day, may cause downward pressure on the market. Moves in either direction will become exaggerated.

On days when the smallest moves can become wildly exaggerated, I make sure that I really have a lot of conviction on my longs and feel secure on my shorts.

Random musings

: Did anyone see the cover of the

New York Daily News

today about the cabbie who trades stocks? Forget the old story about a market top when the shoeshine boy gives you stock tips --

now

we understand why cabbies drive like they do.

Jeff Berkowitz is a partner in hedge fund Cramer Berkowitz with James J. Cramer, co-founder of TheStreet.com. At time of publication, the fund had no positions in any stocks mentioned. The fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that the fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Berkowitz's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at

jjcletters@thestreet.com.