an tSionna 3.29.10

I didn't like that reversal we saw on Thursday.  Stocks gave up those gains way to easy.  The excuse for the weakness at the end of the week was a poorly received treasury auction and geopolitical concerns.  I can't help but think another reason has got to be that traders are becoming increasingly nervous as the market trends higher without a correction and we remain so over bought. 

Next week is Holy Week and trading is going to tail off towards the end.  Also markets are closed on Friday for Good Friday.  Normally end of the month/beginning of the month trading patterns should come into play, especially as Wednesday is the end of the 1st quarter  Normally we could expect money managers to try and goose things a bit for performance reasons.  However I think there is a possibility that we could see at least one rather large down day next week based on how stocks have recently traded. 

We'll especially look to see how the market reacts to the old resistance line which is now support.  A significant move below it could be signaling a change in market trend.

Given the strength we've seen these past six weeks, we've done little right now.  But the playbook is saying based on the action at the end of the week  that we need to update the game plan.  Accordingly we've gone through and identified the defensive actions we might take in appropriate client accounts if certain events start to fall into place.  

Of course it's possible that nothing will happen and stocks will resume their climb.  It's also possible that stocks will correct in time instead of price.  But I think it's prudent to be ready as much as possible in case things take a turn for the worse here in the short term.

*Long ETFs related to the S&P 500 in client and personal accounts.