__________
When the market was struggling at the 1040 level on the S&P 500 in late August, many traders argued that, unless we had a catalyst, we would continue to chop at that level before breaking lower. I disagreed, and wrote this post where I submitted that the market was simply looking for any old excuse to rally due to oversold conditions, combined with widespread negative sentiment. At that point, some mixed economic data came out, and the market did, indeed, use it as an excuse to scorch higher to just above 1100.
In the past few days, the market has become short term overbought at the upper end of the multi-month trading range on the S&P. This time, we are seeing bulls argue that, unless the bears can find a catalyst to send us lower, we are going to consolidate around 1100 before we move much higher. Perhaps they are correct. However, as we are seeing today, breadth is mixed and volume remains light. Moreover, many charts of key stocks are very extended and in need of healthy pullbacks. In my view, unless we are looking at a March or July of 2009 scenario, the risk/reward profile is simply not favorable to allocating capital on the long side right now.
The risk of the market looking for an excuse to go lower is now too menacing to not be respected.
in this case you would hold on to your longs such as ROVI and TQNT? anticipating market going lower i wonder if its better to sell now and buy back at a lower point.
Not adding here. Holding those for some skin in the game in case we drift higher. Waiting until I see more evidence of a rollover before putting on inverse ETFs.
thx. you are so right to wait. i got worried and got some tza @32.75 but the market now drift higher…
Bot $SRS.
Bingo