Stocks continue to march higher as investors react to strong earnings news. These next two weeks could see some volatility. Odds are good the market could run out of gas. Once the earnings news is out, stocks tend to see a little post-earnings depression.
I don't want to sound like a broken record here but we need to wait for a pull back before loading up with new long-term bullish positions. I believe we could see a very attractive entry point in early February. We just have to be patient and wait.
Last week I talked about buying puts as part of a hedge against our bullish positions. As the S&P 500 nears potential resistance at 1300 and the NASDAQ nears potential resistance near 2800 I would definitely reconsider buying puts again on the major market indices (probably puts 30 to 60 days out).
How big of a hedge (if any) is up to your and your own personal level of risk. Any of the big ETFs could work well for us as short-term put candidates (SPY, MDY, IWM).
I suspect that we could see several new bullish plays added to the newsletter before the end of February.