Since I last posted, many of my individual stock and ETF long positions have been taken out by hitting stop loss levels. My cash position is getting bigger as a result.
Looking at the SPY as a proxy for the general market, we are at a key level, yet again.
The SPY is looking very weak on the daily view, with many days of high volume selling reversing the post-Fed-interest-rate-decision-pop, of late September. If the SPY cannot hold the recent low of around 212.50, a move to the downside should accelerate.
The SPY continues to look healthy on the weekly view, adding to the uncertain outlook, in my analysis.
This is one tough market. Neither short nor long positions are easy to take. Certain stocks are obviously in defined trends, but the general market has been stalled and difficult to follow. Without a strong general market trend, the risk of taking on individual stocks and ETFs, short or long, is greater.
My plan is to try go long in the general market with a stop loss in the SPY below the 212.50 level. If the SPY cannot get traction at that recent low, and it falls lower, I will pivot and join that trend.
FWIW, I do believe that the unprecedented global low interest environment and the inability of the US economy to recover robustly is indicative that equities are overpriced in the “real” world. That opinion will not move the market, but it does keep me in a mostly cash position much of the time, and ready to exit longs and pile in short when the **it does finally hit the fan.