Thus far, I've been pretty spot on with some of my trades. Two days ago, I bought more of the financial ETF UYG. In essentially one day, I've made 25% on this. If the financials rally again tomorrow, I'll be getting out of part of the position. In this environment, you just do not ignore a 30% gain in two days. A few days ago, I also got into material names by buying the ETF XLB. I've done this not because I think we are going to rally strong and we have hit bottom. I did it because we were way oversold and there needed to be a short term rally.
I think this rally still has some legs, but not much more than this. I would not be surprised if we break through 850 on the S&P and we get up beyond 8000 on the Dow. I still went short on the DOW recently to give my portfolio some balance and hedge my bets but I think we still have some room on the upside before we correct again.
Do not chase this rally. You should be selling now, not rushing in and chasing stocks as they take off. If you feel you absolutely must get in now, just be ready to get out just as quickly.