Dow up by 337 point, is it for real ? Dow likely to fall 1000 point

Dow was up 337 point, S&P 500 back to 1241 level. The big news was Spain auction went out well followed by New housing start level was 685k while expected was 628k and new permit was 681 k while expected was 653k. No doubt, the number came out better then expected but it wasn't great either.

The market rallied on optimism that housing market is recovering. Now let me show you the real picture of housing starts. Look at the chart below, and its a flat line. I understand a reading of 2-3 million new houses would have been great data.  But its 685k which is normal and there is nothing to be so bullish. US housing market is already in bubble and with new housing added to the current level is going to make it worse. Making new houses isn't the problem, but selling it is bigger problem with high unemployment rate and tighter credit is only going to make thing worse.

Stock market rallying up by 337 point doesn't make sense as it didn't even hit the bottom. If the rally was real, the Eur/Usd would have crossed 1.33, Italian 10 year bond yield below 6, Vix below 20. But none of this thing happened. Eur/Usd is at 1.30800, Italian 10 year bond yield is at 6.61, and VIX at 24.

I am now even more bearish then before at current level. S&P, Fitch, and Moody downgrade of Euro zone countries is still hanging. The market rallied similarly 400 point after S&P put US AAA on negative watch in July. The market then slumped 2000 point after US AAA downgrade. This Europe crisis is even bigger then anybody can imagine and with France downgrade ahead, I expect market to test Oct 3rd low.

US economic data to watch out tomorrow are

MBA at 7 EST. A declining number will be bearish while rising number will be bullish.

Existing Home sale (10 EST):  5.08 M is expected higher is bullish sign lower is bearish sign.

EIA Petroleum status (10.30 EST):  Decline number would be bullish sign, while rising number is bearish.

It's very difficult be bullish with such bad news hanging around where things can change in a blink of an eye. Like I said in my previous article, Hedge Fund managers did trick majority of the people who shorted the market in a low volume rally and made sure their Christmas bonus. Individual investor like us has no such privilege of insider news or super computer trading power which changes the market up/down by 100 points in 2 second. So its better to be defensive or wait till the market is stable. I would still recommend holding TVIX, TZA, FAZ, TYP and short DIA, SPY, QQQ, at its current level.