Tuesday, March 17, 2009

Buu...Buu...Bullish Action

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Don't mess with the bulls - they are rocking the house. Yesterday's dip was bought and so far we have an excellent trademark pullback and recovery. Remaining tilted long until we hit S&P 780 and then we have to see how the market reacts. This is the top end of our current range (741-780).

Tomorrow Uncle Ben Bernanke takes off his glasses and unveils his cape at 2:15 PM so we'll see if we hear anything new but it is not a time to press shorts. I can find almost no one who believes in this move (up) (ok Doug Kass does, and so will Jim Cramer until we turn negative for more then 3 hours) so as a contrarian at heart I want to believe in it for no other reason that so few do. There is no good economic reason for this move but we were oversold (at a historic level) and it has been too easy to wake up every morning and throw on 5 shorts and laugh to the bank. Now the next phase will be much more interesting because you have under invested longs who are hating to see this move without them involved (performance anxiety should be kicking in about this time after saying last week was nothing but a temporary bounce); along with shorts feeling first pangs of fear for the first time.

We'll take it day by day, but in the very near term I see S&P 780 and then the 50 day moving average has traveled down to 790ish. Once more as I said this weekend - the remarkable thing is, if we get north of S&P 800, the charts are shaping up to be uber bullish. Scary thought - but as always I am willing to drink Kool Aid and sing songs of lephrechauns if it makes us some gold coins.

I am mostly playing this with ETFs since the action is so whippy every day (2-4% moves) - I've lifted some Google (GOOG) short exposure as a precautionary tactic as this was one of our "insurance" policies to the downside. I do have a limit order to short ITT Education (ESI) - just a bit higher than here, because even as I drink GREEN Kool Aid I like to short hyped sectors.

Short Google in fund; no personal position


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