Fundamental Mom...'s  Instablog

The bulls stampeded out of the gate this morning, pushing the major indices up sharply on the day; the S&P 500 finishing up 1.3%. It seems the bulls feel that the Greek Debt crisis will get resolved shortly and the Fed will have positive things to say on the economy on Wednesday.

We are encouraged by the leadership shown by the Dow Transports, NASDAQ, and the Russell 2000 (IWM). The other anecdotal evidence of a stronger market was the performance of the stocks in the Momentrix Model Portfolio, many stocks up over 4% on the day (apkt, arun, bidu, hs,lulu, ulta).

We repositioned the portfolio to a more neutral stance, selling the hedges (sds, twm) in the portfolio. Although the market may not be out of the woods, we wanted to eliminate the risk of a market run as sentiment has reached a relatively negative position and the market is oversold.

At this point the cash position (40%) seems to be enough of a defense as the risk has potentially switched to the upside for the market. If we get a follow through rally, we will deploy cash in some new Fundamental Momentum stocks to add market exposure. The next few days will go a long way to establishing whether the rally in the few days will have legs.