Trade Alert: Markets analysis and Leaving the last of the Cisco Disco

The markets continue to climb the wall of worry, meaning that all those bears and shorts and money managers who are underexposed to stocks, keep providing fuel for this rally when they are capitulate into buying.

Look at this wild six month chart of the Nasdaq:

Do you notice how it topped there at April Fool’s Day? The headlines were full of reports of a strong earnings season to come. And the markets topped out instead. Here’s what you guys were reading from me though:

Welcome to the new stock market bubble11:13 a.m. March 29, 2012 | By Cody Willard

Do you notice how it bottomed in a panicky crash back there on June 4th? Wanna guess what the headlines were focused on at that point? Panic over the EU debt crisis, of course. Here’s what we were doing:

Why I’m buying this market12:34 p.m. June 4, 2012 | By Cody Willard

And while I don’t think the markets are necessarily topping out again right now, I’m continuing to trim down the long exposure as the markets hit multi-month highs. Cisco’s trading higher this morning and as I’d noted in yesterday’s Q&A transcript, I’m going to sell the little bit of Cisco calls I have left. I have a slight loss on these even with today’s pop, but I’d made a bunch of money overall on this Cisco trade by having bought the panics and trimmed into the big rallies.

Where have you heard that advice before?