While short-term gains are creeping up, investors should be still remain cautions about the markets and exchange traded funds (ETFs).

After Thursday, the S&P 500 touched 875 and Todd Harrison, CEO of Minyanville.com, thinks the index has enough of a foothold to reach up to 1000, according to Aaron Task for Yahoo! Finance. Harrison is short-term bullish but still holds a cautionary tone, giving these reasons:

  • W? This “breakout” rally could be the end of the currently rally. The stock markets may mimic a W-shape and the S&P may be at the middle peak of the W.
  • Swine Flu. The recent pandemic could cost up to $3 trillion, diminish global GDP by 5% and cause 70 million deaths.
  • Pakistan. There are stability issues in this region. The government is fighting back recent Taliban advances and the instability is not reflected in the markets.
  • Treasury Secretary & BofA CEO. The back and forth verbal dialogue between Ken Lewis and Hank Paulson could create doubt within the system. It will affect the way we think about the government’s role in capital markets.
  • Stress Test. After reviewing the banks, some 6 of 19 banks will need to raise more capital. Harrison does not believe the tests are pushing the banks hard enough. All banks are tied together and weaker banks need to be brought up to par.

We’re starting to see areas pop above their 200-day moving averages. If any of these factors threaten the markets, have an exit strategy and a plan at the ready so you’re not caught off guard.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.