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Climbing the wall of worry

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 COMP -0.35% :

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 bubble

11:13 a.m. March 29, 2012 | By Cody Willard

Do you notice how it bottomed in a panicky crash back there on June 4? 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 market

12:34 p.m. June 4, 2012 | By Cody Willard

Fast-forward back to today and Apple’s trying to break out to new all-time highs and Google’s making a run for its all-time high too. The financials like Goldman and Citigroup act they want to try to trade higher too.

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. I’m taking some nice profits with some gentle trimming of my long exposure by having bought the panics and trimmed into the big rallies.

Where have you heard that advice before?

Cody Willard writes Revolution Investing for MarketWatch and posts the trades from his personal account at TradingWithCody.com. At time of publication, Cody was net long Apple and Google. Follow Cody on twitter at twitter.com/codywillard. Cody’s new book, Everything You Need to Know About Investing, is available in digital and in paperback.

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