Big Move Up. Now What?

Yesterday the S&P 500 cracked through the upper resistance levels to move to intermediate term open water.

Why?

WSJ: "Driving stocks and commodities was news from across the globe that orders for manufactured goods were finally beginning to recover. A survey in the U.S. showed manufacturing orders picked up for the first time in 18 months. Manufacturing surveys in China, India and Europe also showed signs either of slowing declines or actual growth."

Maybe. A few weeks ago another big more up happened on a Monday, but then the market consolidated for awhile. This move broke out of the consolidation range. I'd guess a huge number of beefer hedge funds are underperforming massively and are in panic mode.

Usually they pile into momentum winners and after a few weeks all bail out at once in a correction. So what to do?

I plan to flip some winners and recent adds into future strength to cut back over time to 100% long. I like to be longer on dips, but on breakouts I like to cut back. This way the brutal corrections are not so painful, and I have money to make adds on dips.

Obama Fund is performing marvellously, as is Fido Fund. I will stick to the strategy: this is month 5 out of the envisioned 18 month rebound.

Target: S&P 1200+ by mid 2010.

Word of the Day

"Debouchement" - noun from the intransitive verb, "Debouch" [$10];
"Debouch" this is pronounced di bowch with the stress on the last syllable.
Debouch means 1. (of troops or a stream) issue from a ravine, wood, etc. into open ground; 2. (often followed by 'into'; of a river, road, etc.) merge into a larger body or area.
Sentence: Yesterday's debouchement of stock prices into intermediate term "blue sky" country must be making bearish beefers sweat.

Le Mot Du Jour

"Déboucher" - verb, regular -er conjugation
Déboucher means (transitive) to unblock, to uncork, to open; (intransitive) to emerge, to come out (+ sur ou dans).
La Phrase: Hier cours du marché des actions ont débouché en haut sur les espaces ouverts.
Sentence: Yesterday stock market prices emerged upwards onto open spaces.