To gain an edge, this is what you need to know today.

Biggest Stock Run

Please click here for a chart of  S&P 500 ETF (SPY) which represents the benchmark for the stock market index (SPX).

Note the following:

  • This is now the biggest stock run in 17 years.
  • The prevailing wisdom is that the market will continue going up.
  • Hardly anyone disagrees with the prevailing wisdom.
  • The chart shows that the melt-up continues this morning.
  • Prudent investors should think of this situation in terms of a boat that is going fast and where everyone is on one side.  As long as the waters stay calm, nothing bad is going to happen by everybody being on one side of the boat.  However, if a big wave comes, there is potential for a disaster because all the weight on the boat is on one side.
  • Investors should keep an eye on RSI and volume.
  • The chart shows the volume is not high.  This is a negative.
  • The chart shows RSI is very overbought. This is a negative.
  • It is common for RSI to get this overbought in a strong run.
  • It is also common for RSI to experience only shallow short-lived pullbacks in a strong run.
  • Investors should be on the lookout for a sharp pullback in RSI as a sign that the rally may be stalling.

Momo Crowd And Smart Money In Stocks

The momo crowd is 🔒 (To see the locked content, please take a 30 day free trial) stocks in the early trade.  Smart money is 🔒.

Gold

The momo crowd is 🔒  gold in the early trade.  Smart money is🔒.

For longer-term, please see gold and silver ratings.

Oil

The momo crowd is 🔒oil in the early trade.  Smart money is🔒.

For longer-term, please see oil ratings.

Markets

Our very, very short-term early stock market indicator is 🔒.  This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.

Interest rates are ticking up and bonds are ticking down.

The dollar is weaker.

Trading futures is not recommended for most investors. The purpose of providing this information is to give an indication of the premarket activity that usually guides the activity when the market opens.

Gold futures are at $1796, silver futures are at $27.00, and oil futures are $59.78.

S&P 500 futures resistance levels are 4000 and 4200: support levels are 3920, 3860 and 3800.

DJIA futures are up 121 points.

Protection Bands and What To Do Now?

It is important for investors to look ahead and not in the rearview mirror.

Consider continuing to hold existing positions. Based on individual risk preference, on dips, consider holding 🔒 in cash or treasury bills or short-term bond funds or allocated to short-term tactical trades and short to medium-term hedges of 🔒 and short term hedges of 🔒. This is a good way to protect yourself and participate in the upside at the same time.

You can determine your protection bands by adding cash to hedges.  The high band of the protection is appropriate for those who are older or conservative. The low band of the protection is appropriate for those who are younger or aggressive.  If you do not hedge, total cash level should be more than stated above but significantly less than cash plus hedges.

It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.  When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks.  High beta stocks are the ones that move more than the market.

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This post was just published on ZYX Buy Change Alert.

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