As pointed in my article http://www.freefdawatchlist.com/2012/01/ecb-continuing-fine-tuning-operation.html ECB fine tuning and LTRO operation is creating this unexpected rally and sell off ahead of their operation.
Today China PMI came at 50.5 and main stream media is going to give credit to this data for higher opening and rally, but the fact is today ECB is again printing money for this market.
You can bookmark this link http://www.ecb.int/mopo/implement/omo/html/index.en.html and check Ad hoc communication and open market operation to see their next operation date.
The way to read this site is when you click Ad hoc communication check the tender date offer, for example for fine tuning operation it was Jan 31st, so the market opened high on Jan 31st and at the same time on Jan 30th market will be low.
ECB also conduct open market operation. For the open market read the settlement date for example Feb 1st, market will open high.
Just cross check each of the date to confirm it,
Stock opened high on Jan 31st, Jan 24th, Jan 17th, Jan 10th, Jan 3rd, Dec 27th, Dec 20th.
At the same time, stock were low on previous date Jan 30th, Jan 23rd and so on.
This way you can take advantage of ECB operation and buy bull stock ahead of operation and buy bear stock at the close of Friday.
The other way to play this market is to buy puts or short individual stocks and not the whole sector as the macro economic outlook is bad but stocks are sitting at 2011's high.
Below are the 15 of overbought stock with RSI greater then 70.
You can short it or buy March put to maximise your profit.
You cannot fight FED or ECB so just follow the market and play defensive.