On March 24th, 2000 S&P 500 hit an intraday high of 1552.87.....it is almost 13 years later we are @ 1466.47.
What does it say about stock market which keeps going back in time.......
There is a distinct message in this, Stock market is a trading tool NOT an investment for long term.
Based on last 13 years, It is definitely not a "buy & hold"
There are forces like Quants & Hedge Funds who do not believe in an ascending market. They are controlling price direction by their supercomputers.
Why am i highlighting this ?
Because we are @ another crossroad in terms of conquering numbers which are 13 years old......there will be hoopla & celebration about making new highs in S&P 500....BUT party may soon end.......thus a cautionary approach to any milestone......
YES...S&P may be @ new highs...but it may be time to prune your position.......I will highly recommend 50% less exposure when "euphoria" starts.......
I expect volatility to increase when we get near or above 1552 area.....
Just to give you some perspective, on the day S&P 500 hit 1552.87 on March 24th, 2000......the low on that day was 1516.83....a range of 2.4% for the day......
Also on the week of march 20th, 2000...low was 1446.06 & high was 1552.87...a weekly swing of 106.81 points or 7.39% in a week........
Character of this market has changed when trading went 100% electronic....supercomputers have formulas to work with & do reverse in nano-second........
Now back to our trading model.......
RSI is @ 64.45...i do not see it going above 75 on a closing basis......
I will be selling majority of my position near 75.......which could come as soon as this Friday......
S&P 500 is @ 1466.47, near tern target maybe 1525 area........
I know what i am highlighting is not a popular focus, but reality may be close to my thesis.
Strongly suggest going for singles than attempting homerun & in the process singles fizzles away......
Good luck with your own trading thesis.
BLOG does NOT give buy or sell.
Saleem
4 comments:
Hey Saleem,
I hope your weekend went well!
It is always good to bring some reality into a euphoric moment. The market never moves in a straight line, and we always seem to forget that near the tops.
I posted my portfolio and some general market comments on your previous posting.
It should be an interesting start to the earnings season--how cautious will CEOs be in guidance?
Stocktrader
Hi Stocktrader,
Weekend is always restful when i get to watch my few favourite TV programs......Auto related, Dateline & 48 hrs are my pastimes.....
I like to peek @ history to prepare....I am very jittery near TOP & extremely comfortable near BOTTOM.
CEO should be "realistic" in their guidance.....
Good luck with earnings for last Q of 2012
Saleem
Hey Saleem,
Swapped out WPRT for PRU this morning. It seems like more bumps might be ahead for WPRT including sluggish sales and capital raises given there is still not enough focus on natural gas as a fuel. PRU is cheap and is benefitting from higher bond yields and increased stock prices. They are also generating enough cash to return it to shareholders if the Fed lets them.
Stocktrader
Hi Stocktrader,
PRU looks very strong....
Bought CF few mts ago....
Saleem
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