U.S. Markets open in 7 hrs 56 mins

Trader Urges Caution and Patience as S&P 500 Tops 1,400


Up, up and away we go. It may be the fifth 3-day, 3-percent rally we've seen in the past 2 months, but this time it's different. At least it feels different as we instantly blasted through the key psychological 1400 level in the opening minutes of trading today, but also broke above the top-side of an upward sloping channel that has been forming since June.

And yet, for all the positive you throw at the market, volume remains light and fear is still heavy as concern about a correction seems to grow by the day.

"I don't think you've missed the bus at all," says Ken Polcari, managing director at ICAP in the attached video, before warning "if you're a long-term investor, you bide your time. Do not chase stocks. Allow them to come back to you, which is certainly what I think we'll see over the course of this month."

All the while, this Summer of Hate rally has (so far) defied multiple attempts to knock it down, even though participation has been deemed to be limited given the light trading volume that been a hallmark of the market all summer.

So with stocks suddenly up 10% from the June low, up 12% year-to-date, and fast closing in on the next and obvious target, all eyes have shifted to see if a close above 1425 for the S&P 500 is the next milestone..

"The market has to digest some of this recent move," Polcari predicts, pointing out that the 1400-breakthrough could attract even more buyers, late in the game. "It'll cause a lot of people to jump right in, and that's just when they shouldn't be doing it."

His advice to investors on how to play it is 3-fold: be patient, be very thoughtful about what you buy, and don't be foolish.

"All and all, the U.S. economy is still on a very rocky road. That's why think you need to be cautious. You will get your opportunity," says Polcari.