Markets Fully Recovered... Bulls Rule and Bears Drool
Two days ago if you told me that the overall markets would recover to all time highs I would have laughed. Not at the person who said it but the reality of the situation and circumstances with how stocks had traded for the past month. Yet here we are witnessing all time highs. Three days of open gaps to the upside and during the trading sessions the market continues to relentlessly catch bids. There is the old saying that if you are on the wrong side of a trade do not hold on to it as the market can go against you even more as the market has deeper pockets than any one individual trader.
As some who have been following me I had admitted I been on a wrong side of a trade a couple weeks ago. Hence still fresh in my mind that I have avoided playing the market. I was long volatility prior to the drop and only broke even as markets continued its upward movement before last week's fiasco. My post on that trade experience here.
I have been watching VIX the past few sessions and it has been hitting lower lows daily for the past 3 sessions. This is impacting stocks in a good way. The fear in the market has been reduced and more are willing to buy.
Vix is touching its 200 MACD so may bounce but I am not betting here since RSI and momentum is sloping down. Besides markets are pretty strong right now as SPY closed at all time high with momentum still rising.
Do not forget what was happening just last week and for the past month. A lot of money was rotating into conservative stocks and bonds. This has not changed. I will be looking for TLT to go lower some more and enter when I see a RSI stop slopping down. On a longer timeframe TLT is still bullish. Will see if it reaching 133 and if so how quickly?
Another reason to not go short the market but be cautious going long is the fear gauge is ticking up.
Oil is off its low but barely. This may fuel another bull run in overall market if oil prices can rise.
Tech stocks has been leading the way but oddly today the qqq open above 230 only to quickly drop and slowly recover to close at 228.22. It may have something to do with Tesla as it finally dropped after its recent bull run.
Prediction for Tomorrow and Friday?
If the market can easily gap up 3 times in a row what is not to say it will not do so again tomorrow?
Vix although falling is still above 15 so not below its average just yet so there is still a possibility of a shock in the market to the downside. Yet with China money injection and the FED's continuing REPO support the endless support of monetary policy may likely allow the markets to remain elevated for the time being. I remain on the sidelines watching for the outcome, but as like many other my 401k is fully long in this market.
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It's tough to pick a side in this market. I have been buying puts and closing positions quickly and regularly changing directions and buying calls as well. The swings are where I'm making money, but I still have yet to put in any long-term bets on this market. If we look at a 5 year timescale, I think we're headed downhill, but who knows what will happen in the meantime with all this rampant money printing and repo activity.
Posted via Steemleo
I totally agree with you but looking back I wish I just simply put money in the buy column and not look at it until a decade later. The fact is this has been over a decade bull run and whether it ends tomorrow or five years from now I have missed out on a lot of this gain. I do not know if someone made a study about how much retail investment is currently in the market but I am going on the assumption not very much. Pensions and trusts are the retail and government printing to add in with rarely anyone needing to sell will jack this market to higher highs. 2008/09 retail investors lost a ton so likely will not get back in. Why else are banks laying off people and downsizing, the business is shrinking. Sorry, I got off on a tangent. Thanks!
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I tried to time the market back when it dipped a year or two ago one December, thinking that was the top and we were headed into the next bear market. Glad I didn't stay on the sidelines for long as I would have missed out on some huge gains.
I learned that I'm terrible at trying to time the market and the only thing I'll try to do differently is set a little capital away for the next bear market to invest more heavily when the market is down.