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For those of you that might have noted my bearish predictions for the current quarter, I should say that I am revising my opinion. The companies have been, by and large, doing well in cutting expenditure. So the earnings numbers haven't been bad at all. I don't see any significant danger of the market tanking this quarter. I am getting out of most of my short positions.

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I heard an interesting thought along these lines. Cost cutting usually comes about through firing employees, which will reduce consumption later down the line, so the surprising earnings of companies in Q1 despite lower revenue numbers is a forewarning of harsh Q2, 3, 4, etc.

Cost cutting is limited in its effectiveness and the question must always be asked, how deep is too deep?

Not to say we will be seeing a market tank soon, but I wouldn't rule it out given that the market is supposed to be forward looking and all.
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