My best guess on how the next few weeks unfold is as follows. We should see some sort of a correction next week in the 2%-4% range after which we should rally again. A bigger correction is not likely in the cards until after the seasonally strong period is over. I have not yet decided if I am going to position myself more aggressively for a correction next week.
I must admit to struggling with the market recently. Luckily it has been more of a case of missing out rather than capital loss. The size and duration of the rally we are seeing without a corrective move in between has been with little precedent. Hedge funds dominate the market and their risk on/risk off mentality is creating tremendous moves. I have made adjustments to account for this but it simply has not been enough. Luckily, my understanding of this dynamic has been enough to keep me out of trouble and away from a net short position.