Basically, my thinking on the market is that the risk/reward for entering new positions right now is not very favorable. On the bullish case, last week saw nearly all short-term trend metrics flip from bearish to bullish, thereby all trends (short, intermediate & long) are currently up. However, the current bullish alignment of all trends is tempered by the rarely seen recent back-to-back cluster of AAII Bull/Bear 18%+ spread readings, signals which have typically preceded major corrections since the inception of the bull market back in March 2009.
With the aforementioned cross-currents in place at this time, my preference is to keep things light. I continue to hold a mix of both long & short positions close to market neutral but still remain net short for now. By “keeping it light”, I will be very selective on opening any new positions or adding to any existing positions. In fact, I will be out of the office today for a few hours running some errands and probably won’t be able to reply to any comments or emails until after the close today.
Regardless of my own plan, for those looking to engage this market there are quite a few active trades and setups offering objective entries or add-ons at this time. There are also several trades ideas that have exceeded their suggested stop criteria and others that just don’t look as compelling at this time, all of which I plan to remove asap.