We had a nice ~600 points rally in three days so now I think we are looking forward a pull back very soon. There are several possibilities.
1. Tomorrow's data and Ben's speak are generally positive or neutral, then we will probably have another early day run and pull back during late session. Finance is somehow out of energy, and we expect FNM to report a terrible quarter on Thursday morning. But, any positive sign of FNM ER will boost financial shares and DOW for sure.
2. Tomorrow's data and Ben's talk are generally bad, we see lower opening, then a rally attempt, which is likely to fail at the end.
However, in general, if we see a less then 100 points decline tomorrow, it's still not bad. I still think it will be long's victory if we can hold 12450 for this weekend. So this means, if DOW closes below 12450 this week, we need to reduce our long positions.
I am not recommend a lot of long positions now, I would rather prefer to hedge at this point. Bad economy may sink dollar then commodity and gold will rise. Strategy of today's morning is still valid - long gold until gold hits $1050 per oz.
If you ask me for a bias, I would like to bet that there will be NO big drop in following three days IF tomorrow DOW closes above 12750.
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