All three major indices were UP 5 weeks in a row, all indices are sitting @ new all time highs or new 14 year high for Nasdaq......
RSI sitting @ 66.37
CMF @ 0.342.....
BUT bears are only @ 13.3%......
Bulls @ 56.1%
Based on all of the above we definitely have "amber light flashing"
This means that we are getting "overbought".......
We may have 1 more day of UP move...then RSI may hit 72 area where it has turned markets lower every time......
Many optimists may like to say "its different this time"......but it never is...72 RSI means trouble for market.
Bulls @ 56.1% means when we go over 60...again heading for trouble.....
NO you must not sell everything ....BUT it is good to know we may be heading lower in indices & be ready for it......
Some may sell all profitable position
Some may take a short approach
Some may do covered call
Some may do absolutely nothing.....
It is all about your own comfort level & your strategy.....some strategy is extremely short term like traders of this BLOG & some may look @ long term.....
BUT it is important to know that last time when we corrected in 1st week of August ( 4 weeks ago) we came above 30 in RSI......& it took 10 trading sessions to get to low & find support......S&P 500 lost 4.35%......
I guess...i have written enough to do some planning for short term strategy?
BLOG does NOT give buy or sell.
Saleem
6 comments:
Hey Saleem,
Amazingly, I wrote about almost exactly the same thing with extended sentiment and price, and tried to find some reasons for possible selloff ahead.
I think it is wise for all to think profit-taking first, bargain-hunting second for a while.
Stocktrader
Hi Stocktrader,
We are getting overbought from couple of reliable indicators.
RSI is followed by many technicians which is getting near overbought levels.
As listed by both of us...taking profit is JOB 1..
Saleem
Hey Saleem,
Sold HUN @ 27.605.
I'm trying to sell stocks with which I am not extremely comfortable in order to reduce overall exposure based on my thoughts on the market. HUN is one I don't know that well.
Stocktrader
Hey Saleem,
Sold FDX @ 152.87.
It has had a nice run into earnings based on positive analyst comments which I think dampens the upside potential. Pricing wars on e-commerce with the USPS and UPS won't help the forward outlook, but operational efficiencies might offset. Overall, I'm willing to "wait and see" with the quarter.
Stocktrader
Hey Saleem,
Sold NXPI @ 71.684.
I feel the AAPL-based move is nearly priced in after a great run off the $60 bottom a month ago.
At 25.6% cash now, I feel like I've lightened up enough while still respecting my plan of action. I have flexibility to move in either direction now :).
Stocktrader
Hi Stocktrader,
Good move in selling some stocks to increase your comfort level.
@ 25.6 percent cash you have lot of flexibility.
Saleem
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