With respect to my mental health I have found that being actively bearish because I want to be bearish or because I think bearish is the right stance is not the way to go. That way I miss being a bear hero (“See? I told you so!”) after all those months of whining and complaining about a robo-rally. Something in my wiring does not allow me to function well when an irrationally bullish and inflated pig rises week after week when I am short it.
No, the right thing for me is to have parameters and an important parameter on the S&P 500 was touched yesterday. That would be the old 2815 area resistance (now support) that we managed on the way up. Yesterday SPX dropped to this support zone and this morning is positive in pre-market.
Is it out of the woods? Not by a long shot. The SMA 200 and a couple of gaps lurk lower and the SMA 50, which it failed yesterday is above as a short-term resistance area. But nor is SPX broken with support and the SMA 200 below. If/when it breaks and hopefully bounces to create a short opportunity I’ll consider shorting. If not I’ll hold cash and focus on other investment areas.
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