How To Trade The Birinyi Associates Call (SPY, CAT, DE, X)

According to Birinyi Associates, the end of this month, March 31, will mark the end of the recent correction, as we continue higher.

Cleve Rueckert, an analyst at the firm gave specific data which he believes confirms his thesis. He said that when the S&P 500 loses 5 percent during a rallying period, the decline lasts an average of 41 days and extends to 8.3%, which would be 1,232, 2% lower than where we closed yesterday. The S&P 500 peaked at 1,343.01 on February 18, and has fallen since then.

“History suggests that the current decline will be short- lived, and most likely presents a buying opportunity,” the Westport, Connecticut-based research and money-management firm said in a report today.

Laszlo Birinyi, the founder of the firm, believes the S&P could climb to 1,333 in 2011, and as high as 2,853 by 2013, based off previous bull cycles.

If you believe the firm, then now may be the time to start initiating positions in names you've been stalking or are highly levered to the global recovery, such as Caterpillar CAT, Deere & Co. DE, U.S. Steel X and others.

Shares of all these names are moving higher, especially Caterpillar, as traders believe these names will be beneficial in the building of Japan, as well as the ongoing global economy recovery, both in emerging markets and domestically.