Curbing the Enthusiasm...

Good probability does pay off in this market, or in any market!    Basically, the trading thesis for us during the past few days was buying ETFs in anticipation of a rebound.    Today's the day, we "cash out" most of our chips.     Reason is simple, in this environment you have to sell on these "300+" rally days,  just as you would buy on a "-300" down days.     These days,  short term is usually 4 hrs and long term is like three to five days.   We’ll take whatever profit we can get out of this tough, miserable market.     Frankly, this run- up isn't one of those "one can time perfectly" kind of bounces.   But, you could see it coming as optimism around financials (C is just the latest bank to tell investors the current Mar Q is tracking to plan or better , (BAC, WFC, COF, PNC, and others, have all made comments to the St in recent wks signaling an on-track Q).  Citi was just the weakest stock and this news just exploded the sector.    This really should have started off WFC last week.   There's also been a divergence betweeen CDS spreads and the sectors stocks,  today these tightened across the board and helped the cause.   As far as tech, we noted TXN  could light up the scene here again and it's update didn’t disappoint.    Add these 2 sec's together and you get the biggest move in the SPX since November.   Still, we feel fortunate and somewhat lucky to get this kind of a point gain in ONE day without waiting another night or an extension to 6% over days.   Also as far as luck is concerned,  it didn't come as pre-run on M2M, but still was led by the banks- brokers..."pre-earnings type move in the financials/ brokers ( the laggers JPM, GS  eyes on) with market in tow".         For that reason alone,  we'd do the right thing and cash out the majority of our winning.  Back to our recent trading thesis, and it's all about probability.    If you ignore all the doom and gloom talk from every corner of the financial media,  it was just inevitable that we'd get a relief bounce from a trader's point of view.    If you followed the market pundits' never ending DOW 5k and SPX 500 call, you'd go nuts going long in this market.     We just had to stick to our trading discipline and play what's probable and NOT what's emotional!    Just remember, we bought stuff last few days not because we like this market,  but the fact we are playing for a bounce, nothing more.   We noted the supply of sellers on every rally …“…those expecting a bounce “(like us) … just use the next uptick to get out their supply of shares and sell instead of waiting with another night of overnight holds to chance again a real move upwards “(not us). …Well,  those that sold these latest upticks,  missed a big opening bell run -up and profits.   We do admit though,  separating our emotional feeling and trading discipline can be very difficult in this turmoil filled environment.   Strategies have to change as we go along.

Technically,  we are pretty much 3/4 of a way through toward the major resistance of SPX 740.   The climb toward SPX 742 will be much much harder in our opinion.    Right now, all kinds of possibilities are open on the table.   We can consolidate or we can inch toward SPX 742.     As far as news flow, we felt the M2M hearing and G20 events will now be non- events as of early today.   See midday forum post.

As far as plays go, all of the sectors on our list got a boost today, it’s hard to trade lower today, the most hated recent groups traded best (financials, industrials, materials, casinos).   Traders were not into ‘safe’ groups/ stocks.  We are still focusing on our usual ETFs and few selective techs/commods for coming days,  if buying opportunities presents itself.    If we can close the week higher than today's closing,  it'd be very encouraging.   Potentially, it can attract some sideline money back into this market.