This morning is the most damaging to the bears since the war began. The reason isn’t particularly the percentage change – – as I’m typing this, the /ES is up all of 0.7% – – but instead has to do with prices puncturing above resistance levels.
Far worse, they are doing this based upon no meaningful news. It’s not like Iran has surrendered or anything. Prices have simply been powering higher ever since the Friday the 13th close. Here is the /ES:
The small caps /RTY likewise has busted above resistance, and this is even with me pushing the horizontal as high as possible without incredulity:
Tech stocks have also pierced the veil on the /NQ:
The Dow Industrials /YM is still below resistance, although just barely.
Simultaneously, volatility is plunging, having lost about one-third of its weight since a couple of Sundays ago.
Before we all commit bear suicide together, I would note that, step back to a longer time period, the /ES downtrend is still solidly intact. This is a dangerous day, to be sure, but lower highs are absolutely still in place.
Stepping back further still, our mega-top is also unviolated. I’ll just say it again though: this is based on nothing new. It seems that simply the Lack of More Bad News is sufficient.
I take a bottoms-up approach to my portfolio, allowing individual positions to get stopped out back on their own bespoke settings instead of simply throwing up my arms and covering everything willy-nilly. Having said that, my exposure has dropped to 68% overall as I now turn my attention to making sure remaining positions have appropriate stop-loss levels and, next, examining the contents of my Bear Pen to see if there are any other interesting candidates worth opening.
