We were curious how long it would take to erase Thursday's closing minutes selloff.
Answer: 20 minutes.
Now, we will look for the next important step in the rally and that is a move over the most recent highs i.e. S&P 1130+. At this point we've created the setup for the best trade of 2009, that is the double top breakout ... so far we have the double top (S&P 1129, retrace...then return to S&P 1129). Throughout the middle of 2009 whenever these breakouts happened - a very quick 4-7% return happened in the index shortly after, which we profited greatly from. Similar situations failed in November, and December 09.
So let us see what the first one of 2010 brings, once we jump over S&P 1130.
One strategy I like to do here is to sell all my index exposure as the double top is tested, and then rebuy it if we have a successful move over that double top - which I am actually going to do right now. I only wish I had the massive amount of index exposure I had last Thursday at 3:30 PM, rather than what I had at 3:59 PM.
On a very temporary basis we'll be out of our index longs at roughly S&P 1129. Intent to buy back on a break over 1130, or a pullback to low to mid 1120s.