SO..here we are sitting @ 1465.77 after hitting high of 1474.51, now the logical question is what next?
This week is triple witching, which means higher than normal volatility.
Technicians are split about market direction, some are euphoric that we go higher & higher ...because no one believes in this rally & expecting immediate pullback...that is a "contrary indicator" for them.....
Other technician are pointing to pullback on Friday from highs & VIX jumping 3.27%..a sure reason to expect pullback for few days......
I normally see technicians coming to the same conclusion, but NOT this time......?
S&P 500 & DOW sitting @ five year high, while Nasdaq @ 11 year high.....
Based on RSI @ 74.74, S&P 500 looks overbought.......
Risk / Reward ratio is certainly challenging to say the least......
S&P 500 has gone from 1329.24 to 1474.51 a gain of 145.27 points or gain of 10.92% in a span of eight straight week.......that needs digestion time for sure......
Overall trend is "firmly UP" but not in a straight line......
Market NEVER goes UP in a straight line, it pauses for few days to few weeks...then resumes uptrend.
I definitely believe that there is a pullback coming which may last for few days, sometimes these pullbacks are sharp.......
Many traders get very euphoric near TOP, thanks to CNBC & Jimmy the Cramer who gets most excited when stocks have moved UP 20% or more.....then he shouts buy,buy,buy......not before.
SO, you can stay the course & take the pullback in stride or book profit & wait for another entry...it all depends on your OWN comfort level & read of this market.
I have always recommended strongly to book profit, this way market cannot take your profit to a loss scenario.
Good luck with your market call.
BLOG does NOT give buy or sell.
Saleem
8 comments:
Hey Saleem,
Great blog as usual! :)
After looking more closely at charts this weekend, it certainly seems like a pullback is desperately needed. I can't find any time in the last three years (during which we've had huge bull runs) where the $SPX is this far above the bollinger bands. This pullback would be a welcome chance for many to get reinvested and for the market to form a better base before moving higher.
To that end, I'll be keeping my hedge on for now, and hopefully my stocks can outperform to help me towards some gains.
Stocktrader
Hi Stocktrader,
Hopefully this pullback maybe 1.5 day MAX.......then on to new highs....target is still 1500.
Good luck with your strategy.
Saleem
SALEEM
Hello
I will. LeaveSeattle Monday
Love the market but when one is up huge
I can get a nose bleed
I can not decide what to sell
Regards
C
Hi C,
IF you are not sold on selling then don't.
Have a safe trip back.
Saleem
Hey Saleem,
Sold SPLK at 38.011 and GRPN at 4.89007. I was too slow in pulling the trigger on these earlier which is a shame, but I feel more comfortable having sold them regardless.
BTU's action is fantastic today given the iron ore/coal/steel selloff. I'm not sure today is the day to step in, but it is interesting nonetheless.
Strong action in FFIV today--hopefully that isn't spoiling your purchase plans!
Stocktrader
Hi Stocktrader,
Today is definitely NOT the day to buy....
I feel i may wait till Monday next week to buy...unless price is right.
Good move to book profit.
Saleem
Hey Saleem,
Bought MNST at 53.78. I've been watching this company for a while as you know, and I feel now is the time to enter. I believe many of the potential negatives are known, and there is a lot of positive divergences on the chart despite the "lower low" recently. Also, GS put out some positive comments today.
Given my large hedge, I don't mind some matching long exposure if I find the right stock/story (and I also sold other longs earlier today--SPLK and GRPN).
We'll give this one a try...
Stocktrader
Hi Stocktrader,
Good analysis for MNST purchase.
Good luck !!!
Saleem
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