Now that the XLF is at its old high and has made the measured move from its breakout base let’s sell 1/2 the position cutting it from 10% to 5%. This locks in profit and will help if the XLF fails to break to new highs.
Yesterday was another trading range day, but the market did its job of holding Friday’s breakout.
There were some large bear surprise bars this morning after a nice rally and breakout to new highs. So far, we have moved back into yesterday’s range.
The bear surprise sell-off bars this morning could be a one-off event. Nevertheless, we need to pay attention. This could also put us back in a trading range for the rest of today’s session.
Rising wedge patterns concern me on the daily charts (e.g., the NASDAQ 100). After the S&P 500 reaches the 4450 measured move, I am concerned that we will move into the next 40-day trough due the second or third week of August. That could be a hard down and might finally give us a 5% to 10% trading range.
We will be selling our SPY and SPY calls when the SPY reaches just below 445.
The XLE is picking up steam this morning and remains a hold for now.
Rotation is full-on this morning, with the NASDAQ 100 yielding to Financials and Energy. The latter two companions seem to be linking up again.
As previously indicated, I am out this week but promised to keep you updated.
A.F. Thornton