What’s Next?

Pity some of the poor hedge fundies. They’ve been fighting this rally and have gotten their heads handed to them. The WFC news last week didn’t serve them well either. Reloading the shorts here could be virtual suicide. The question then becomes, “when will they capitulate and buy into this thing?”.

Look for retailers to continue to post good numbers, especially ARO, BKE. CHS and KSS. People are also itching to ride the roads, wind blowing in their hair, so check out HOG.

Tech is moving nicely, even the old names like INTC, ORCL and YHOO (who is renewing talks with MSFT).

Also, the base metals are moving higher, as I mentioned in last nights post. In this space, I like FCX.

Be cautious on GLD, however. The technical trend is down since February. Even India is refraining from buying gold since the IMF is advocating selling. There’s also risk that a number of emerging and developing countries may be selling gold to raise cash, especially when they see it melting down.

We could see gold at $750 sometime this summer. However, there could be a short-term play before then, so I would be a buyer of gold on a bounce to $900.

What do the bulls need? They need the Dow to breach the 8500-8600 level in the next couple of weeks. Should it do that, the next long term resistance is at about 10,500. In addition, were this to happen, we could possibly end up looking back at this past February-March 2009 as “the bottom”.

Remember, however, that the future is uncertain. Trade accordingly and only risk what you’re willing to lose.