Good morning, Slopers. Well, the wind continues to fully inflate the sails of the U.S.S. Bullish, as the world’s most protected and enriched “free” enterprise sector, the big banks, continues to produce excellent earnings. It’s sort of like celebrating that the Army and Marines secured funding for the year. It’s kind of a guarantee. In any event, the /ES has pushed based the Fibonacci retracement (red line) and is sporting a very saucer dish, ready to rock higher.
I would remind my gentle readers that, while the crossing above the Fib is something I’m not about to celebrate, it isn’t unprecedented. Indeed, the past three times this happened, all it represented was a last gasp before the market turned resolutely lower. Of course, neither support nor resistance represent permanent impediments to price action, so the day will come that this line is left in the dust and is transformed from resistance to support. Maybe that’s today. Maybe it isn’t. There is only one thing that can tell you that, and it is spelled T-i-m, except you also have to add an “e” at the end there.
Do things look bad for the bears? Yeah, kinda .In fact, they could look awful. Here’s the /NQ, which has a cup with handle pattern, fully formed, ready to blast higher (if tech earnings come in to everyone’s liking).
The small caps are in the same situation, sporting an even larger base pattern than last time (which, back then, produced a multi-month rally).
And, just to scare any remaining bejesus out of you, here’s the /ES, whose inverted H&S could likewise set us up to challenge lifetime highs this year.
The one and only bright spot for me this morning remains crude oil, since some of my positions are strongly geared toward oil weakness.
So what am I doing during these increasingly troubled times? Well, I’m neither panicked nor distressed. To be sure, this isn’t a happy-happy, joy-joy market for me (at ALL) but a few things are keeping my wits about me:
- I have lots of time, as is almost always the case, with an average days-til-expiration of 149. No 0DTE for this boy.
- I have lots of intrinsic value in my options.
- All my positions have been carefully chosen on their own merits, although I’ll be the first to admit that none of them are utterly immune to broad market movements.
- Yesterday I dialed cash from 5% up to 20%, getting it out of harm’s way.
Every day, the picture reveals itself a tiny bit more. I shall continue to take portfolio management one chart, and one trade, at a time, and not get swept up in any popular narratives.
