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Thursday May 11, 2006 9:47PM ET

Greetings,
Tuesday evening we did our best to prepare for you the impending correction without yelling FIRE in the theater.

Today's correction had very little to do with the Fed. I know what you're thinking -
"but the headlines said..."

A fed announcement does not a market make. Fed-speak merely serves as fuel for the current "real" problem, smoldering just beneath the surface. Today the S&P fell 1.28%, the Dow 1.22%, the NASDAQ 2.07%. Although selling was relatively wide-spread, the underlying situation is far from corrected. The true culprit remains this imbalance in P/E ratios. The economy is strong, perhaps healthier than any time in history, but investors are a little wiser today than they were in 2000.

When all you needed was a dot com after your name to create value, such things didn't matter. Perceived value, potential value, even speculative value reigned supreme and oh how that venture capital flowed, like milk and honey. Today, companies are being forced to prove themselves. Investors and even traders are demanding that CEO's "show 'em the money" or at least the value.

Along with our cautionary words, we also offered encouragement. While the overall markets spent the day reaching down in an attempt to find their "real" values, our
flight to quality increased its altitude by a healthy 8%.

Eric Fry's comments really stand out and warrant repeating here. The following is his take on the declining dollar vs. our flight to quality:
""She brought it on herself," say insensitive investors. "She threw herself at every man who walked down the street, you know, practically giving
herself away to anyone who asked. She just didn't know how to say "no. "What do you expect?"

Meanwhile, gold hit a quarter-century high, with June contracts selling for $705 an ounce.

The yellow metal, buyers noticed, is everything the dollar is not. While the dollar could never say "no," gold says nothing else: No to debt. No to
new spending schemes. No to improving the world. No to re-electing scoundrels. No to bubbles. No to foreign wars. No to trade deficits.
No, no, no, no, no.

While the dollar was a good-time girl for everyone, gold barely said a word; she never lost her head, never held a press conference, and never
made any promises. Not surprisingly, it was Dame Dollar that crowds called for; it was she whose telephone rang. It was she who got invited out, and
she who showed up at every party."

Well put Eric. The venerable Sage of Omaha resembles that remark with his latest quote - "The Greenback could be facing a rough road ahead. All of the ingredients that have been causing the Dollar to weaken have, if anything become intensified and we have no national policy that is going to do anything other than weaken the US Dollar over time".

Even though our flight to quality has only one golden egg in the basket, I would be amiss not to point out, all that glitters isn't gold. Our personal $3.5 billion valuation also embraces significant amounts of silver, mica, copper, and micaceous iron oxide.

CFRN - Re-Mixed
With a year of broadcast history behind us and our first People's Choice Award on the shelf, we are defragging and reformatting our show which is now heard daily in over 20 countries. Beginning Monday, broadcast time will be 9:30AM ET - 12:30PM ET each trading day. We trade the Russell live in real time against a back drop of diverse, insightful, irreverent and often contrarian market commentary. Savant is with us each morning as well as professional trader Greg Delassandri founder of Trading Faith, Dave Floyd CEO of Aspen Trading, 20 year veteran floor trader Ben Lichtenstein joins us directly from the floor of the Chicago Mercantile Exchange and you never know when a special guest will show up like Patrick Byrne CEO of Overstock.com, or noted author Max Lucado. Friday's at the opening bell, journalist Mark Faulk of The Faulking Truth joins us for a look at the politics behind the markets. Mark is currently completing his latest book, The Naked Truth - "Counterfeiting the American Dream", which deals with the issues of naked shorting, greed, corruption, manipulation and a little known company that no longer trades. A penny stock that will go down in history as the greatest anomaly to ever hit Wall Street. In its heyday, CMKX often traded as many as 8-9 Billion shares a day. More than Microsoft, Intel and Cisco combined. Joining Mark tomorrow will be Debbi Kionte, World Vision Artist, professional trader, mother of 2, and wife of a New England pastor.

The Road Ahead
Should the S&P reach down tomorrow in search of more value, keep a close eye on the 1295 level. If buyers fail to step in at this critical juncture, take the day off or else buy a ticket for the southbound E train. Pack a lunch! That ride could take us as far as 1255 by this time next week.

Remember, it's only a retracment in an up-trend. Not a FIRE!

Trade Safe
From the Desk of CT
aka Dances with Fibs

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