August 21, 2024

What a tremendous move up, SPX is currently 5608.78 as I write this. I am really impressed and surprised by this move. As I shared earlier I started selling about 200 pts ago around 5400, after about a 5% move up. I took profits and set-up stops in most of the stocks I shared.

My perspective was we had move far too quickly up in such a short time. Below is the CNN ‘Fear and Greed’ indicator, and it shows us at ‘Neutral’, or at 51. You can see previous readings as well.

Do I still think we are coming down? I’m unsure now, I did add to the usual suspects after seeing this strength, but relatively small amounts. However, the odds (probabilities) are higher we come down, than go up. Below is an interesting chart from ‘The Short Bear’ a great follow on Twitter.

Above you see that the we are experiencing the lowest put/call ratio since 2023, as he shared on his Twitter. 

This game of trading only works if there is a loser. Unfortunately, most do not win, as I shared earlier this month; retail investors sold an inordinate amount of their holdings during the mini-panic we had in August. I believe many were not able to make considerable gains during this move up, and possibly are negative or at best net neutral for their PnL for August 2024. 

What does this mean? It means everyone is on the long side or trying to get long as they missed the boat, and if everyone is on the long side, that means you must be cautious. Does it mean to short? No. Does it mean to sell all your holdings? No. 

Just be cautious moving forward, we have experienced about a 450pt or 7% move from 5150 to 5600 in 15 days, and if we count business days it is even less (12 days)!

What to possibly expect from September, from the StockTradersAlmanac (great resource). We have once again followed seasonal patterns (to an extent) and let's see if the bottom holds true. 

Safe investing friends!

Disclaimer: Please note that all information shared here is for informational purposes only and not intended as financial advice.