For all you superstitious traders we are Friday the 13th and also the last trading day before the Ides of March (15th). It doesn’t get and more spookier than that. Yesterday’s huge up move was a continued combination of short covering and sideline cash that does not want to get left behind. The question one has to ask is how much father does this move have to go?
We continue to be long the market medium term as we believe there is still pent up buying. Given the strong gains over the last three trading days the prudent trading strategy is to continue to trade with a trailing stop. We have option expiration next week which will add to the volatility as a huge Index Arb Fund that is currently frozen will have to be unwound before next week’s end. Expect more back and forth action today with the possibility of profit taking going into the weekend.
As a trader, one must control that little voice inside that is saying you have missed the bottom and the Stock Market freight train is now quickly leaving us behind so we had better buy. Expect at some point a retest of the Market low (on the S&P that is 666 just to add to the superstition of this market).
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