Regular readers will recall my oft use of market cliches and there is no bigger than 'Sell in May and walk away'. Needless to say, I have been taking profits myself and encouraging others to do so as well. Yes the longer term picture is finally starting to turn up, but a new 'bull market' is still some time away.
The chart above (and my comments from last week) suggest we may need to do some corrective work in the market place over the coming weeks. The 50% level of the recent move up currently sits near $80 on the SPY and I would be willing to bet that we will go to somewhere near there. The low from last November (a level that I think needs to be tested again in earnest) is 73.22.
I will be using this target window (73 to 80) for the SPY going into the early summer.
Technical Trading alert (short term traders only):
For those that do wish to trade this anticipated move, here is a Daily chart of the SPY that I have put a TTA (Technical Trading Alert) out on:
I especially like the August $85 put option on SPY. If the market goes to $80, they will have an intrinsic value of $5, if $73, $22....They have moved up a bit today with the breakdown in SPY (curr $4) so don't chase them. I have an open order to buy at $2.50 (1/2 of what I think they will be worth at the 50% level). There is a gap from yesterday's open at $90, if the market rallies into that window I ought to get my fill.
Remember, this is for risk capital and is a high risk trade!
If you do get filled be sure to have your order to sell (at least 1/2 position) working right away.
That's all for this week,
Brian Beamish FCSI
The Canadian Rational Investor
the_rational_investor@yahoo.com
the-rational-investor.com
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