The Giants are up 10 to 7 in the middle of the fourth as I am writing this.  Speaking of up, Australia and Japan are both up over 2 % and China is up over 4 %.  The week has very little economic news, which is probably for the best since most economic data is now moot as a result of the cumulative 1.25% cut to the funds rate and the extra .50% that came off the discount window.  The Fed really stepped up to the plate with some serious cuts.  I find it a bit baffling that they took such extreme measures, but waited so long to do it.  Unfortunately, I am seriously negative for the year as a result – but that will make the recovery that much sweeter.

That leaves corporate news to really influence the flow of funds for this week.  We broke through critical resistance at 1380 and the next major hurdle comes at 1410.  The MACD, RSI and Slow Stochastic for the S&P500 are all calling for buys.  As long as we don’t anything to raise “new” alarms, I expect the market reaction to be mostly positive.

A long time ago I came to the conclusion: that once you were satisfied that a bottom was in, you don’t sell until the long recovery rally has run it’s course.  I will again stick to this logic.  I expect profit taking at 1410, but that should last no more then a couple of days.  I am trying to operate under the new rules and that means that I will be looking for an opportunity to make a move to safety where I can gain a couple of % back on the index this month.  1410 could be that opportunity, but profit selling tends to happen so quickly intraday, that it’s hard to time.  Anyway, it would be a short move as I will be back into stocks before long.  In this scenario, later in the month I would then be counting on the extra “default to the G” move because I expect this rally to run it’s course before the months out.

If I try to make the short play, I will comment to that effect in my talk thread.