In order for me to really get aggressive again on the long side, I am going to need to see evidence of an underlying bid which supports a change in trend. As I expected, the rally from the 1010 level on the S&P 500 has been fast and furious, but we now find ourselves up four days in a row. Further, we are currently churning just below the flat/declining 20 day moving average, which is at 1076.
The zoomed in up to date daily chart of the S&P illustrates this point, with the orange colored 20 day moving average shown just above price (see below).
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A pullback and successful retest of the 1040-1050 area, with strong buyers presenting themselves in a meaningful way, would compel me to look for more aggressive plays (breakout plays), and to allocate a much higher percentage of my portfolio to long equities.
Of course, if a successful higher low does not occur, I will maintain my overarching defensive posture consisting of a high cash position. On any rapid deterioration, I would also look to reapply downside hedges.
Thanks boss
Agreud! The similar pattern from early June could play into a break of the 20-day up to the 50-day (which coincidentally is the top of the downtrend since the end of April). Feeling optimistic in the long term as there will be many opportunities to load up on longs. I’m feeling giddy right now, which usually isn’t good for my longs (short term). Now that earnings are gonna get going…everything is lining up for the big “at bat.” Also, using the PPT as a guide…always!
Thanks Chess!
Welcome to Theta Burn Friday! Solid analysis CnW! NY AD shows little conviction either way today
Excellent stuff. The 20 day is giving me pause. It would be really nice to breakthrough that on strength this afternoon.
My thoughts exactly, a low volume pullback to a higher low is just what is needed here