Same feeling here. The market almost rebound from May downturn and push even higher. It has been speculated that Fed pump billions of $ into the market for political reason during summer. I think this make sense. Economy will definitely slow down, whether it is recession or crash still hard to say. It is not surprised that Fed will pump more if it smells something terrible happen, but no one knows. It is a fight between wise investors and government power. But fed is not superpower anymore, it needs to take care so much problems at one time, inflation, $ depreciation, or housing crash. Any careless move will lead to unbearable result for US, a country that stretched so much during the past 5 years.   

I remember LZ have posted one about funds in bear market. I need to dig it out and do some analysis. Thanks for sharing your ideas, it is really good. And you definitely take good attitude for investment. I should do some hard work as well on investment, but just feel lazy sometime. Anyway, I agree with you, but just need to be watchful on the invisible hand- the monster Fed!

So in a down or recession market, is there any field that can have better chance?

this post support your view:

http://articles.moneycentral.msn.com/Investing/CompanyFocus/3SignsThatAStockCrashIsComing.aspx?wa=wsignin1.0

cash is the king unless u are comfortable with holding bear market fund or shorting the index.

for longs, i have an earlier post about outsourcing. that maybe a shelter

very good point you made here. as long as there is no deflation, i think fed is doing a good job. inflation is not the only thing fed is worried about. that's definately true. I have no problem with fed pumping money, we just need to be aware of it. Unfortunately many people do not realize it.

Remember the last few waves in a bull market (i consider last 3 years a bull market) is the strongest. same as the real estate bubble. so the drop will be very siginigicant. there are people arguing that there maybe another leg, which will take us to 17000 before it crashes. bear that in mind that market can go even crazier before it crashes.

nonthless, be careful and keep an open mind.

Thanks for the link. for whoever interesting in reading the article, here is the highlight:

• One of the indicators says stocks are simply expensive compared with other investment options available to big money managers.
• Another says that mutual fund managers have mostly exhausted the supply of dollars they have available to put into the market.
• the third says that the smartest investors are now betting on a downturn. Together, these harbingers paint a far different picture of the market than do the raw return numbers.

a major reason I think this upcoming correction (maybe a start of down turn?) is different than may 2006. if you bring out the chart, compare, you will see may correction is really sharp and sudden, that's the reason I post in july saying that I am max out my 401k. a sharp correction left many fund no time to exit. this time it's different, the past 6 down days, i watched the market very closely, everyday drops a little, and bounce back and drop again, at market bottom this means bottom is forming, and top, means big money is exiting. once they are down exiting, what will happen?