The chart to the right highlights the current levels of the S&P 500 and its ten sub-sectors relative to their trading ranges. The chart is included each day in our Morning Lineup, which is available to all Bespoke Premium subscribers. For each index or sector, the circle represents the current level while the tail represents where the index or sector was one week ago. The light red and green regions represent between one and two standard deviations above (or below) the 50-day moving average (DMA), while the dark red (and green) shading represents more than two standard deviations above (or below) the index's 50-DMA. As shown in the chart, the S&P 500 and all ten sectors are currently trading at overbought levels, so the recent strength in equities has been a tide that's lifted nearly all boats. To further illustrate this point, we would note that as of yesterday's close 92.4% of the stocks in the S&P 500 are trading above their 50-DMA while 77.4% are overbought (1+ standard deviation above 50-DMA).To receive access to the Morning Lineup, and the rest of the Bespoke Premium package, subscribe now for just $1 per day.
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The slope of this rally is getting very steep.
ReplyDeleteTo be honest I am getting very nervous my gut tells me to take this opportunity to take off risk. I know that the market can continue higher but I would had felt more comfortable with a pull in before making new highs. It is just feeling a bit topsy. Not compelling enough yet for me to buy more puts but enough for me to close out more risk.
ReplyDeleteNot that I am trying to call the top but I get the feeling that we see Dow 11,000 and S&P 500 at 1,200 followed by a sharp pull in. But this could just be the fear speaking. I currently only have about $1k at risk right now after booking about $1,200 in profits on this move to new highs. My goal is to be as close to flat as possible before I leave on vacation next week. Then my plan is to take the rest of April off from trading to get a little rest and catch up on some reading. I feel like I need the break.
ReplyDeleteAlways trust the gut, even above charts.
ReplyDeleteSo I am feeling pretty good about my decision to close out many of my long positions. This morning looks like volatility is catching a bid to the upside. I am not sure how far down the market will go maybe test the 1150 area on the SPX...I am looking for a spot to take off my SPY 11 puts that expire next week. Currently they are going for about $0.10 and I paid .56 for them. I want to offload them today, so I will take the $.10, there is no reason to let these things go to zero.
ReplyDeleteI need to work on my hedging skills and maybe even consider doing some put spreads. I seem to just throw money away on the hedges which I guess is fine if my positions traded in my favor because in all reality if my positions work then the loss on the hedge should be more than offset on the trade. But I want to look into this a little further.
I'm sitting on a 117/113 SPY put spread. This wasn't a hedge but more of a gamble. But I am also interested in incorporating hedging going forward. I know it's supposed to be insurance, and I understand that if your trades work they should more than make up for it, but I just hate to see something go to zero but if I take it off today with a week to go, isn't that gambling as well? So instead I played some mental accounting games with myself and left it on, but also sold some naked puts on BAC at $18. So if the market sells off, maybe I can make some money on the SPY put spread and get in to a stock I want to keep and write calls on.
ReplyDeleteI guess taking off those $111 puts yesterday was a good call at $0.10 as the resilience in this market just continues. The puts are now trading at $0.04.
ReplyDeleteJust sitting on my hands. Still holding onto my two small positions in PFE and MEE (from IWO). Less than $1k exposure.