I used yesterday's weakness to reduce my hedges and would now describe myself as a bear dressed up as a bull, albeit a very conservative one. Rydex traders became even longer last night and we are gapping up. I am trying to become more bullish for the next three weeks of very strong seasonality but the market is making it very difficult for me.
I have found that excess bullishness heading into strong seasonality generally leads to gains, albeit modest ones. Most of April's strength is seen in the first couple of days of the month and then in the middle of the month. If we rally early next week I will likely raise the strikes of my long SPY puts. Protection is cheap and I am happy to pay for it given the excess bullishness.
I would not be surprised to see today's early strength fade and am considering fading it for a trade. The biggest negative is that if I am wrong I will need to cover at the end of the day as we head into strong seasonality next week.