Securities Research Services

Sunday, May 06, 2007

Stay Long Until Confirmation

Stocks in general closed out the week on a high note. We suspect that there will be a lot of top callers coming out of the woodwork here, which could potentially keep the market afloat as they short too early and then are forced to cover at higher prices. Nevertheless, the market is vulnerable for a correction here.

It is a good idea not to get too aggressive and to make sure to keep tight trailing stops. If we see the market continue to inch higher this week, we may see better set ups start to emerge. If we see the market get stuck this week though, we may find that the truism “sell in May and go away” has once again proven to be good advice. We see no reason to take on a short position until the market confirms one way or another though.

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