US stock market closed @ new all time high in DOW & S&P 500, most have focus on this accomplishment.....
BUT...I am deeply troubled @ the overbought condition going into Friday's close.
VIX closed @ the lowest point in last 52 weeks a loss of 59.95%...any deep loss like that is rare which may become a major turning point
RSI @ 72.17 in S&P 500 is @ highest point in last 5 months....another deeply overbought condition.
Most are not worried about these 2 important technical development, reason being, we are very complacent near any turning point instead of being alert or being concerned.
Many will dismiss all of the above ..because "its different this time "
Why its different?
Fed Chief told us that again yesterday....low interest will stay till 2023.....2 more long years...
$1.9 trillion stimulus is approved....
THUS good time has just started...
Vaccine is taken by over 100 million American's and roughly similar focus all over the world....
HOW can anything go wrong NOW.....
BUT BUT.....Stock market knows all that and have already " factored all that in "
Market needs time to digest gains and and see the reality of " new world " who wins and who survives..
Factoring all of the above....
I am looking @ 3 weeks of choppy market....
Currently " risk reward ratio is extremely poor "
It is always wise to leave the last dollar to those who believe party will never end....
After 3 weeks or so we may get a chance to find a very "oversold market "
I am least confident near top and most confident near bottom....which has always kept me in the market since 1972....a long 49 years where have seen many " bull and bear markets repeatedly "
SO...have reduced my exposure below 40%......for now
This does not mean that my buy list is blank..NO RSI is my guide to individual buying decision...
In my world RSI below 55 is a good number and can be bought IF reasoning are justified...
Good luck with your own take of this market and your comfort level.
BLOG does NOT give buy or sell.
Saleem
2 comments:
Hi Saleem,
Very wise recap for this week. We never know the reasons, but overbought conditions like this don't need much to cause a stumble.
Two Weeks ago: +5.20%
Last week: +1.26% (YTD: +18.31%)
Notable Leaders: SNAP TPR PLAN GRWG
Notable Laggards: ENPH LYFT EAT EH PSNL
In a vacation week where I mostly left the portfolio alone, it did fairly well considering the small cap index pulled back. An eclectic mix of winners and losers doesn't help draw any firm conclusions, but overall the market feels stretched and earnings season is upon us. I hope I've kept a good balance of industries and stories to continue to generate returns.
Holdings: FDX AGCO QRVO TPR SNAP EAT PLAN PSNL ENPH LYFT BHVN SUMO GRWG EH, cash 0.0%
Stocktrader
Hi Stocktrader,
Thanks for your highly valued feedback for my BLOG upcoming week analysis.
Last week UP 3.63%
YTD UP 5.03%
Bought AG in pre market @ $17.31
Saleem
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