Damned If You Do/Damned If You Don’t

Random Thoughts

The market continued to rally. The Rusty managed to tack on nearly 1%. This action has it closing at all-time highs. The Quack wasn’t quite as impressive but it did manage to close up over ½%. This is just enough to have it closing at multi-year highs.

The S&P also had a decent day. It closed up nearly ¾%. So far though, it only appears to be retracing its prior leg down. Obviously though, if it makes it to new all-time highs then it’s no longer a retrace.

I really hate “V” shaped recoveries at high levels. By the time the market gets all the way back to new highs, it’s overbought and due to correct.

Overbought markets create a dilemma. If you buy them, they correct and take you out with them. If you don’t buy them, then overbought becomes super duper overbought and you’re left behind. Damned if you do and damned if you don’t.

Things generally remain mixed but with the indices making marginal and not-so-marginal new highs, more sectors are also making new highs. So, there is some improvement.

I wouldn’t get too excited just yet. There are plenty of sectors that still look like they are in trouble. This is especially true in anything interest rate sensitive with Bonds remaining in a serious downtrend.
Gold (and other Metals) and International Markets also remain in downtrends.

It’s a dangerous environment to be making a lot of decisions. Therefore, don’t make many. It’s okay to sit back and let things shake out. It took me many many years to learn that sometimes the best action is no action. If you’re new to this game, I just saved you a lot of time and money. You’re welcome! Honor your stops on existing positions. If you really really like a setup, then knock yourself out. Just make sure you wait for entries and of course, honor your stop(s) if triggered.

Futures are flat pre-market.

Best of luck with your trading today!

Dave