The market has fully recovered and hit an all-time high. It has jumped 10% in the past 3 weeks, which is incredibly aggressive. I am skeptical it will continue much longer. We are now sitting back at the same resistance that we had been sitting at for months. The S&P 500 is now above the 3 ATR channel and is overbought on the daily chart. To be honest, it feels like a setup for another pull back. The market is already trading at very lofty valuations and the party cannot continue forever. The only time it has been higher is the dot come bubble.
Source: https://www.multpl.com/shiller-pe
With that said, the market can stay irrational longer than a person can stay solvent. It is these kinds of moments that test my patience with my trading plan. I am keeping pace with the market YTD, but not beating the market for the year. However, I have been here before and know that, in the long run, I will win out.
Not sure what happens next. Most breakouts fail, but this run has defied all expectations up to this point. Trying to short right now is like playing chicken with a freight train. The chicken ends up in a stew, but you are the bankrupt chef. Certainly some of the the move at the beginning was short covering. That can’t be all of it.
I have tightened up my stops, but will see where this goes. The farther away we get from the gap, the less likely it is to be filled. Not sure I will take any trades into the weekend.
