It’s been a very choppy week.
I wish I had more commitment to a direction, but I just don’t.
Technicals are very mixed.
The Oscillator is neutral, not oversold or overbought.
SPX is almost smack in the middle of the range from the 2400 high to the 2322 low.
We are close to reclaiming all the moving averages, but there’s no real conviction.
Tech still shows relative strength.
Small caps and banks had a bounce off recent support, but I’m not sure if they are out of the woods.
Bios are still hanging in, but no one is paying up.
XLE is still broken.
It’s very hard here to figure out exactly what to do ahead of the French election this weekend. The Brexit and Italian Referendum were bought. But you had plenty of time to act.
You could have bought after the news hit. And the same was true for Trump’s election victory.
But at least there was price discovery.
Options guys are pricing in an SPY straddle at $4, meaning a 40 handle move has to happen for bets to pay off. That would take us below SPX 2322 or back towards all-time highs.
If Melenchon and Le Pen advance to round 2, which could happen, the market won’t like it because they want to exit then European Union. That would raise fears about Italy being next.
By noon on Sunday, we should know more.
It’s a good time to focus on your time frame.
If you are a long-term investor, stay the course in your stocks. If you contribute to a 401K or 529 plan, just keep the money flowing into them.
If you trade short-term for alpha, treat this as a binary event /earnings report. Use options, or wait to figure it out afterwards. There will be many more trading opportunities in the weeks to come.
After an 8-year bull run with SPX only 2% off all-time highs, it’s hard to take too much risk because if you get caught offsides, you could get hurt.
I will be flat equities heading into the weekend with just some leftover options positions.