Hocus Pocus

Many view seasonality as hocus pocus. As long as it keeps working more times than not I don't care what people call it. The first few days of April are very seasonally strong. Unfortunately, we are entering this seasonally strong period with extreme bullish sentiment and a market that has not had a real gut check in months.

I have found that strong seasonality helps extreme bullish sentiment persist more times than not. That is why I used last week's weakness to position myself more bullishly. I left put spreads for protection in place because they are very cheap right now and because the extreme bullish sentiment is a risk. We have also seen rumblings from Europe in recent weeks as the sovereign crisis threatens to worsen.

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