Breakout!

Stocks defied all odds last week and broke out of a 4 month long downtrend led by strength in the nasdaq. The lower volume aside, it sure APEARS as though the broader markets wil at least re-test the highs. The rally was more or less based on investor optimisim derived from the perception of a "soft landing" for the economy as opposed to a full blown recession. As sure as everyone seemed to be that the markets would turn lower last week after a selloff on the fed pause, the nasdaq broke it's 50 dma and a downsloping trendline:
Right now, we have a major breakout on lower volume in a slowing economy. The chart says we go higher and so I would recomend looking for breakouts on individual stocks. Some that I will be following early next week will be LMS, FMD, TNL, GRMN, NITE, DRIV, TRMB, ISE & ICE. Yes that is a long list but there are alot of nice charts right now. As a technical trader I have to look for long set ups in this market, but I will be quick to sell as fundamentally we should break the last few weeks lows in a slowing economy. It may be smart to either hold a large amount cash or hedge your long positions as this breakout could easily fail and reverse. As a possible hedge you might ant to look into VIX (volatility index) calls, this is a bet on a major market decline. Also, histoically the VIX has not been much lower than the levels is at now(which suggests we may be on the cusp of a major decline).