Topping Out?

So I am still disappointed by my week end performance, I could have added quite a few more profits but instead have only managed small gains due to my hedge being in place. Options expiration actually had more movement than I expected. I decided to take some positions off before the weekend as they had moved a decent amount in a short time and I will look to get back in on a pull back with different options to lock in profits. Same story, different day but it continues to work so why stop?

I feel like this rally has just about run its course over the short term. Earnings are definitely coming in better than expected and we MAY be turning the corner however once earnings season is done with the market will again look to actual signs the economy is recovering and if it doesn't happen as expected this could lead to a decent pull back. 875 used to serve as good support and now should serve as resistance. If we take out that level then a run to 900 is likely. I am going to look for some more put plays to get into so I am more balanced going forward. I think we could pull back to 850 then resume higher. A break of 850 would signal a break of the recent uptrend and horizontal support and likely cause some more selling down to the 800 level.

Until the 850 level is breached the uptrend is in tact and it makes sense to be long biased. My feeling though is that a move down could be fast given the significant run we have seen and may not offer much time to recognize it. If we continue to have good earnings AND good economic indicators there really is no telling how high the rally could go. Again, the trend works until it doesn't and I have to assume it will continue to work until something changes and I will change my bias to the short side as needed. As long as the market trends I believe I can continue to profit fairly well as long as I am willing to be flexible. I still have yet to see that large rally and exhaustion I would like to see before going short. Maybe it will come next week or maybe it never comes I'll have to manage risk properly either way.

Total Return for 2009: 132%