A Bull Market with No Fear
New highs in the S&P and with almost 25% of the stocks in the S&P 500 coming into the day with 2-period RSI readings above 90, a pause within day or so is now expected. The behavior overall though is bull market behavior with any signs of market weakness being met with a flood of buying.
When I look at the TradingMarkets Analytics Screener, I see that most of the higher volatility S&P 500 companies are overbought today whereas the lower volatility S&P companies are more neutral. This indicates to me that many long only big-cap equity funds and also larger hedge funds are playing catch-up here by buying the higher beta blue chip companies in order to pursue greater gains (you can see the same thing with such low VIX readings). Right now it’s a bull market with no fear and a market that has continuously punished those who have tried to pick a top since the first rally in 2009. Heavily shorting into this market has not been a smart game and will not be a smart game until the S&P breaks under its 200 day ma. If you are using fixed dollar risk in your trading (R), being long index call options on defined pullbacks remains the smartest path.
We’re happy to announce we are offering two AmiBroker training classes in June. These classes will be taught by Matt Radtke, the Director of Research of Connors Research.
For more details on each of these training classes, please click the link which best describes you: