With the best four-week performance since 1938 behind us, with the markets up more than 23%, many analysts are wondering whether that sort of performance can be maintained.
This weekend, Drew Kanaly of Kanaly Trust said he was "highly skeptical" that the rally could run any more than a couple more weeks, and attributed it to extreme oversold readings following Treasury Secretary Tim Geithner's "ill-received speech of Feb. 10."
And Mark Arbeter of Standard & Poor's agreed with him. But Mark is still looking for the S&P 500 to run to "875 to 890 before a major correction sets in."
Sean Brodrick of UncommonWidonDaily.com is sticking with gold, silver and the Market Vectors Gold Miners ETF (NYSE: GDX).
Sean said he also likes the ProShares UltraShort S&P 500 (NYSE: SDS) as a way to play the short side of the market, and I've regularly included the chart of the SDS as a favorite.
He also points to volume as the key trigger to the next decline saying, "Keep an eye on volume. If volume starts to fall off while the major indices keep rising, that could be a sign the rally is about to end."
All agree that there is a lot of anxiety among portfolio managers and analysts regarding the next round of earnings. Drew Kanaly puts it this way: "Finally, with the end of the first quarter of 2008 fast approaching, some portfolio managers may have experienced 'performance anxiety' -- buying stocks so as not to miss the rally."
And our own Michael Shulman of OptionsZone said, "The rallies will end, company profits will be anemic, the market will wake up, and the headwinds against short positions will subside. Be ready when they do."
I would add that the recent rally in technology stocks could continue past Easter. But a run in a volatile sector has been characteristic of the final phase of most bear market rallies.
Traders can profit from fast trading in the sector, but the chances of a market reversal are very high, thus, most investors should use the rally as an opportunity to lighten up on their losers.
One tech name to consider buying is Dell (NASDAQ: DELL). With the recent rise in technology stocks, Dell is acting better and could run to its 200-day moving average, which is why it is my Trade of the Day.
Sam Collins is a contributor to OptionsZone.com.










