You buy on a pullback to the 10 SMA. So, put a limit buy at whatever the 10 SMA is once you see that cross.
Your exit will be typically fast - within a day or two max.
Don't get greedy. We're not in a market that is in a long bull market.
However, did anyone see CNBC today? There were two guys (one Peter Eliadias of Stockmarket Cycles) who pulled up a 30 year chart. If you take the low from 1982 and connect it through the 1987 crash low and then the 1992 (I think) low, you get a consistent trend line going up. Magically, SPX 740 is that level. That's why SPX has held that level so well. If it breaks then watch out. If not, or the longer it stays around here without breaking, the bigger and faster the short squeeze taking the market up to who knows where.
Right now I think the guys on Fast Money are right that there are only two traders in the market -- short sellers and shorts getting squeezed. No long term long investors. Those mutual fund investors hold the key to the support of the market. Right now, why? Why buy? The longer they wait it out, the cheaper they get in. The only problem with waiting too long is that the further the market overall falls, the less and less amount of people they'll find to invest - or be willing to invest. So, they end up creating a problem for themselves.
The sooner the market starts to climb, the faster the overall consumer sentiment will rise as the wealth effect will take over again making everyone not worry about whether or not they'll have any money left.
But then again you got Obama's budget. That's scary stuff. A reduction in home mortgage interest deductions? Huh? Is he insane? Raising capital gains tax? huh? Either he's going to end up being the dumbest President in history or he's going to be the smartest having out-smarted the best and brightest economists and historical examples.
Since everyone thinks he's the messiah, who knows.
The market could be signaling he's dead wrong and the market knows and senses it. This isn't the best time to be gambling. I don't understand why they can't do what's worked EVERY TIME it's been done. CUT TAXES DRAMATICALLY and then let the public do what they do best with THEIR money - BUY STUFF WITH IT!
The 1980s are the best example - Reagan came into a situation with 13% interest rates, 6% inflation and a combined top tax rate of over 70%. What in the world was Carter thinking?
What Reagan did was cut that top rate to 25%, but more importantly, allowed you to write off (if you owned a biz) literally everything. You go out to eat? Write it off as a biz expense. Imagine what that did to the restaurant biz! One of the largest employers in the country and the place where most start biz's.
Basically anything you bought for your biz you could write off. It took about 2 years, but when it all got going, WOW did it. What we have now is the complete opposite with not one real life example to go back and point to to prove the pholosophy works. Gambling with YOUR money on a liberal fantasy of how wonderful the world could be if only that tax money was spent in the 'right' way.
Boy, we'll see. The market says no way. But, the market has been proven wrong before. I don't know when, but I'm told it has.
AI
