The stocks futures are trading lower as the European markets are dealing with the fallout of the French vote today and futures are lower. The dollar has strengthened against the Euro. Sounds like a lot of behind the scenes turmoil doesn't it.
A week ago I updated the thesis to suggest the need to be more two sided. I specifically said that "I am thinking that we should use strength to consider short positions going forward and dips to make some additional buys. A good 10 to 15 point move higher on the SPX, for example, would be a good place to consider short positions for example." We are 10 points higher as of Friday's close and I have put on a number of short positions as we inched higher.
My thought is that the market is likely to get a sharp pullback in terms of price sometime this week. Given the way this rally has unfolded, it's likely to not be a long pullback though in terms of time. Today may be the start of that although it is end of month and there's a desire to keep the prices up here ... at least today for month end closing prices. I definitely would not be chasing new positions at this point but instead to pick and choose among the hot stocks for individual quicker type trades as the risk/reward equation doesn't favor most long picks at this juncture. As a rough measure of how tight the rubber band is starting to get stretched, note that the number of stocks with an overbought reading on their RSI is starting to get reasonably extreme.
A week ago I updated the thesis to suggest the need to be more two sided. I specifically said that "I am thinking that we should use strength to consider short positions going forward and dips to make some additional buys. A good 10 to 15 point move higher on the SPX, for example, would be a good place to consider short positions for example." We are 10 points higher as of Friday's close and I have put on a number of short positions as we inched higher.
My thought is that the market is likely to get a sharp pullback in terms of price sometime this week. Given the way this rally has unfolded, it's likely to not be a long pullback though in terms of time. Today may be the start of that although it is end of month and there's a desire to keep the prices up here ... at least today for month end closing prices. I definitely would not be chasing new positions at this point but instead to pick and choose among the hot stocks for individual quicker type trades as the risk/reward equation doesn't favor most long picks at this juncture. As a rough measure of how tight the rubber band is starting to get stretched, note that the number of stocks with an overbought reading on their RSI is starting to get reasonably extreme.
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