Well, that was fun. I'm talking about the 63 minute pre-market rally in stocks today that followed a solid jobs report that boasted a 7.7% unemployment rate, the lowest in four years. By the time the market got around to opening at 9:30, an hour after the report was released, the bounce was all but dead. Except for a brief courtesy pop, jittery investors were already over it.
"Hedge your risk now," is how Bill Baruch, market strategist at iiTrader reacted to the early movement. "You've gotta prepare for the worst and hope for the best," he says in the attached video, urging investors to protect themselves and their year-to-date gains by using futures or ETFs so they can "look for the downside potential while still enjoying the upside."
Like many of us, Baruch feels a sell-off is overdue but he also thinks there's a good chance that stocks continue to go higher, partly because he says investors have been wanting to get off the sidelines all year.
"I think the reality is people are afraid of missing the bus right now," yet at the same time, he concedes that he has all his clients "on their toes" just in case his fears come true.
"Economic data has just killed it so far" this year he surmises, "but if we start missing data, and the debt ceiling starts overhanging as well, you're going to start seeing pressure on this market and there's going to be people, very quickly, wanting the sidelines."
How deep and how long an eventual sell-off will be is anyone's guess, but the last hiccup we had following the release of the Fed's meeting minutes last month proved to be short, shallow and nothing more than a buying opportunity.
Already, market technicians such as Jonathan Krinsky at Miller, Tabak & Co., are pointing to the S&P 500's triple top. In a note toclients, Krinsky writes "On March 24th, 2000 the SPX made its high of 1552.87. The October 31st, 2007 high was 1552.76. Today’s high, so far is 1551.65. While the all-time high remains up at 1576, it is interesting to note the 'potential' resistance that the 1552 level represents."