Hi everyone, welcome back. Indexes aren’t moving as much so I’ll keep the post short.
I think we will continue higher, but now would be a good time to take profits because I think we could have a small to medium pullback (5% – 10% drop) sometime in the next 3-4 weeks. Risk reward favors the downside now, so it doesn’t make sense to have large long positions here. We can always add back to our positions on the next pullback.
A good sign that the pullback is buyable is if we see small red candles down near the 350 range. 350 is a reasonable short term buy level where we would use a very tight stop loss no more than 5%. If it continues to break down and close below 340 on a weekly basis, I would assume the bottom end of the range near 320 will be tested.
SPY weekly chart below. We are still well above the trading range breakout level at 350. No reason to be bearish yet.
Let’s see what develops next week. The energy sector continues to outperform, with financials being in line with the SPY this week.
Enjoy your week and stay safe.