Long In The Tooth

Look people, I realize that many non-sophisticates are getting all school-girl giddy and giving out free hugs because of this recent rally. But simply know and recognize that this market is getting long in the tooth, old-man style.

Yesterday saw the NYSE Bullish Percent rise to 65%. Keep in mind that the last rally from the end of November thru the first week in January topped out at a 66% reading. So, we are approaching overbought territory. Is the outlook going forward, better now than in January? Hmmmm….

Plus, I have noticed that the breakout activity is starting to taper off from it’s prior blistering pace. Yes, there are pockets of peace and goodwill due to things like optimism, but remember, optimism isn’t an investment or trading strategy.

As for me, I remain cautious, having made my lionshare of returns this past month. So, I’m positioned, hovering over my kill, like a big cat waiting to pounce on anyone or anything that would try to steal from me or threaten my survival. In market lingo, I’m getting ready to get short (and swipe the heads off the bulls).

Optimal Alpha is 45% cash, 55% long equity and 32% short equity. Still hanging on to 48% gains ytd.

Carry on.

UPDATE: I’ll be traveling the rest of today and will be out of pocket tomorrow, visiting clients. I’ll post here and in The PPT this weekend. Happy trading.