SPX - on the path to 950? What to do now?

My previous post, "SPX at the Crossroads" looked at a possibility of a breakout above 875 resistance and a 6-week trending channel on SPX. We got it today. Unfortunately, volume remained weak, but this has not stopped the market, since the last 100 points on the SPX were achieved on below average volume. This will likely change if we continue to march forward and onward, as the ensuing buying panic may pull more money in.

The technicals remain stretched, but every pullback continues to be bought. Banks are acting strong, despite looming stress test results on Thursday. They just don't act like the sector facing the most difficult time in decades. I think the bad news for the time being is understood and to a certain extent, Thursday may be anticlimactic. Commodities, energy, materials, and emerging markets continue to see a lot of $$$ inflows.

Having said that, the macro backdrop remains pretty dismal. There is no question about it. We will continue to face many economic headwinds over the next 12 months+, but thanks to the FED and Treasury, we were able to kick this football up the field, to deal with them in another time. So what investor to do?

Accuse me in not being original, but I plan to sell in May and go away. Specifically, sometime around the end of May (going on vaca on 5/21 so will likely do some selling before I go) or when we get to 950, which is my near term UPSIDE target on SPX.

The way I see it, the question really boils down to the one of strategy. Investor has several basic choices:

1)Continue to play in the sandbox with the bulls. Make some money by being in the right sectors, but emphasis on very strict discipline/money mgmt (tight trailing stops), or using options(either covered calls, buying some calls with no equity exposure, or buying puts, to limit downside). Easy money has likely been made.

2) Wait it out in cash or high quality bonds...until the tape turns and you jump on board and join the merry ride downhill. It's OK to miss some money here, being late is better than being wrong.

3) Invest in some specific sectors you know well...perhaps some health care names or other defensive, which did not participate in the recent rally...or some commodities like Natural Gas which is not likely to go much lower even in major selloff.

4)Do nothing. Make some popcorn and watch the action. Fun for the whole family.

It really becomes a matter of one's comfort with one of these choices. I am not advocating shorting at this time. Timing is everything and until the sentiment changes, shorting will remain a very risky play. In this one-directional tape, the old adage is spot on: being early=being wrong.

My personal choice involves a slightly more complex strategy, known as Barbell. I will describe it in detail in the next post.

In a meantime good luck. Would love to hear comments on this one...