Here we are at a point in the market which is very telling. We are riding a wave so don't try to swim out of it.
Given today's action, it is clear the market wants to go higher and will go higher if only because no one is willing to make it go down. We are hitting a breakout level on the S&P with the 20 day SMA passing the 200 day. Very bullish and confirms the recent move of the SPX above the 200 day. You can't be short here except for small positions on select items. The bulls have taken over and will likely cause a nice run. No need to get in the way.
I continue to play the market in a way that I am not exposed to U.S. individual companies. TBT, UNG, EEM and CAF are my primary holdings. I have not been able to get into a short position on KRE as my brokerage firm has none available. Lucky me. KRE should even have a run here which will present a better shorting opportunity.
The VIX is dropping below key resistance and thus, I have to believe will go lower, perhaps to 24 or 25. This opens the door for an S&P above 980. At that point, I will have to move to the sidelines on emerging markets EEM and CAF by buying puts on them in a defensive move. I will continue to hold TBT and UNG for a longer period and think they are great plays for the long haul.
As we approach 980, it is time to look for the really overvalued stuff. I think RIMM is overvalued now but I won't fight the tape. I want to see a peak of the market around 980 or more and then wait for technicals to start breaking down. When they do, it will probably break down fast. If you miss it, don't sweat it, there will be plenty of time to ride the slide down. Don't try to time to the top. Technicals will give clear indication of when it is time.
Even AXP which is down over a point today in a surging market is staying in a bullish technical pattern. AXP will see 15 by end of September but I will wait until this little run is over before re-entering a short position. I got out at 24 since it did not technically break down. AXP could see 30 before it breaks down but I suspect it will stay in the 25 range for the next two weeks even if the market surges.
Good luck and enjoy this wave up. It is a good opportunity to make money on the way up and will provide big opportunities to ride the wave down. Make sure you don't get caught in the under-current.