Market is sitting near multi year highs.
S&P 500 @ 1519.79
RSI @ 66.40
IF we cut all the NOISE, which is plenty these days of an imminent 10% to 20% pullback, there is an ongoing STRENGTH in TAPE.
Many negatives are being talked about on a daily basis, some of them are :
-Company insiders are selling 9 to 1
-Dumb money is buying NOW
-AAII reporting bullish sentiment @ 2 year high
Fed minutes is being released on Wednesday which MAY impact this market.
Politicians will be in focus to deal with difficult budget issues.
Fed & politicians may be ready to give us a "positive surprise" as expectations are very low.
Caution is definitely warranted @ these levels but nothing justifies to be in Panic mode.
RSI has some room to run.
I have not seen "euphoric buying yet"
When RSI hit 75...then its time to be "very worried"
I am basing all this on "historical numbers"
TAPE continues to reward "good picks"
YES...it is important to keep an eye on "euphoria" but we are NOT there yet.
Most traders are optimistic till April....then major pullback......
Seasonal pattern is into play until April.......
All of the above is based on seasonal pattern, which may be a "better indicator than all the NOISE put together"
When i look @ S&P 500 chart for answer...it is still looking HEALTHY
We are "worrying type as trader, but it is important to look @ extreme overbought numbers as guidance".
I am more "constructive now" because many technicians are becoming "bearish"......being CONTRARY is a good approach.
YES...exposure CAN & SHOULD be reduced, but staying in market is a WISE approach.
SO..stay worried, but be IN the market.
Good luck in your OWN comfort level.
BLOG does NOT give buy or sell.
Saleem
4 comments:
Hey Saleem,
Sold AXLL @ 60.554. It's been a huge run and I also wanted to reduce some cyclical exposure in case consumer spending weakens or the sequester bites hard.
I will probably select a few more for sale today also including probably BAC which also has similar exposure and has also had a great run.
Stocktrader
Hi Stocktrader,
Booking profit is a good idea & not being exposed to weak sector.
Housing stat today was a major surprise.
Payroll tax also impacting consumer spending.
Saleem
Hey Saleem,
Believe it or not, I think HLF might provide good value here. I think the idea that HLF can go to zero doesn't make much sense even with some FTC action, and I think the multi-level marketing model can work well especially in developing countries. Add in huge cash flows and short interest and I think this stock could really take off.
Now, having said all that, I'm not sure I'm brave enough to initiate even a very small position for the retirement account--it's just so hard to put parameters on both upside and downside potential for risk/reward analysis. I guess this is more of a gut feeling and the earnings report tonight/conference call tomorrow could shed better light on the company.
I'm not sure I'm adding value for anyone here because most people are probably "hands off" when it comes to HLF, but maybe it's worth watching, especially in the post-earnings response in the next 24 hours.
Stocktrader
Hi Stocktrader,
HLF is highly controversial & news flow may not be pretty.....
Management is being pushed into a corner & may do "stupid things" to justify legitimacy.
I say.....stay away from HLF mess....its not clear cut @ all.
Saleem
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