The market is now setup for a pullback. Will it just be a pause in the move up, or will the market collapse as it has done so many times in recent history? Should long positions be sold? Should a hedge be established to protect longs? Is a short position worth establishing here?
Or perhaps if there is still too much uncertainty about market direction, we should go with a market neutral position. The long QQQQ/short SPY position has done very well during 2009 and is beginning to pullback a bit. The technology stocks will likely outperform the SP-500 during another collapse, especially if the financial stocks lead the way lower. If the market continues to move higher, technology may still be relatively better than the SP-500.
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