Just a quick update this morning.
I have been looking to increase stock exposure for a little while now, but have been hoping to do it on weakness. We've gotten some this week, which means our bearish sentiment has been correct to this point, but the market has only dropped modestly to this point. Especially the S&P 500. There may be more weakness coming, but this market is quite resilient. And as of yesterday, underlying market support was still high in spite of the downside pressure. That can change, but so far it's helping to mitigate the weakness. Many technical indicators are pointing lower (breadth, A/D line, momentum) and with just a bit more downside traders may begin to get more defensive. So we have a good chance to see lower prices, but it may or may not be easy to buy given our IFT limitations.
I am just trying to frame risk. Because if I decide to buy weakness, it won't be because the technical picture is improving. It takes too long for those indicators to turn back up. And this market has a habit of turning quickly once a bottom is put in. My concern is that seasonality is getting more positive as we get closer to the holidays. It's worth taking more risk at this point for that reason alone. Certainly before the Thanksgiving holiday next week. And there's only a few trading days left before we reach that point.
Let's look at one chart:
Price has dipped a bit this week, but at face value we can see it's been relatively modest. Still, the 50 day moving average and rising trend line support are not far below current price. I was looking for those lines to be tested earlier this month, but it didn't happen. It may or may not happen on this dip either. But I am looking to increase my stock exposure by 20% if price can at least test support. I'll add more if we get a more substantial decline (I still have 2 IFTs). RSI is neutral, but momentum (MACD) is still pointing lower.
Of course, if we don't test support and this market starts climbing again, I'll be increasing my exposure in that scenario too. But I have to give the market a chance to show me where it's going over the next few trading days.
One other item of note is that our auto-tracker is showing another 0.5% dip in stock allocations. That's a positive as it indicates defensiveness beginning to rise.
I have been looking to increase stock exposure for a little while now, but have been hoping to do it on weakness. We've gotten some this week, which means our bearish sentiment has been correct to this point, but the market has only dropped modestly to this point. Especially the S&P 500. There may be more weakness coming, but this market is quite resilient. And as of yesterday, underlying market support was still high in spite of the downside pressure. That can change, but so far it's helping to mitigate the weakness. Many technical indicators are pointing lower (breadth, A/D line, momentum) and with just a bit more downside traders may begin to get more defensive. So we have a good chance to see lower prices, but it may or may not be easy to buy given our IFT limitations.
I am just trying to frame risk. Because if I decide to buy weakness, it won't be because the technical picture is improving. It takes too long for those indicators to turn back up. And this market has a habit of turning quickly once a bottom is put in. My concern is that seasonality is getting more positive as we get closer to the holidays. It's worth taking more risk at this point for that reason alone. Certainly before the Thanksgiving holiday next week. And there's only a few trading days left before we reach that point.
Let's look at one chart:
Price has dipped a bit this week, but at face value we can see it's been relatively modest. Still, the 50 day moving average and rising trend line support are not far below current price. I was looking for those lines to be tested earlier this month, but it didn't happen. It may or may not happen on this dip either. But I am looking to increase my stock exposure by 20% if price can at least test support. I'll add more if we get a more substantial decline (I still have 2 IFTs). RSI is neutral, but momentum (MACD) is still pointing lower.
Of course, if we don't test support and this market starts climbing again, I'll be increasing my exposure in that scenario too. But I have to give the market a chance to show me where it's going over the next few trading days.
One other item of note is that our auto-tracker is showing another 0.5% dip in stock allocations. That's a positive as it indicates defensiveness beginning to rise.
