Special Rally Edition!
Tonight I will be on Fast Money on CNBC at 5:15 pm discussing the market rally from the post Japan lows, and what to do if we a) breakout or 2) breakdown
Key thoughts on the rally:
Good Breadth (A/D).
Last week, I mentioned SPX 1310-1315 level — we broke thru there today
February highs must be decisively taken out — its only 2% away from here!
Poor volume; today was 2nd light day of the year; C = almost 10% of daily volume. (Strong volume shows conviction, and reflects new buyers + institutional enthusiasm).
Few stocks have both good valuation + good technical setup (warrants caution)
End of quarter window dressing, NFP, post Japan relief — explains some of the lift
If the market breaks out over the Feb highs, we would use SPYs for exposure;
Downside trade strategy: 1) tight stops on longs; 2) QID/SDS for the fast trade (but not for a long term hold); 3) Cash to redeploy at more attractive levels