Thursday was a choppy session for the S&P 500 as the index bounced between gains and losses before finishing in the middle of the day’s range, up a modest 0.3%.
Wednesday’s 1.4% pop was one of the biggest up days since the November rebound kicked off. But buyers were a lot more cautious Thursday as fear of heights kicked in.
I’m not ready to call this a top, but anyone buying at these levels is going to need a TON of things to go right for them to make good money on their trade.
Everyone knows stocks move in waves, and we have gotten a tremendous amount of up since the November lows. It is only a matter of time before we get the next inevitable down wave.
But like I said, I’m not calling this a top. The only thing more foolish than buying here is shorting for no other reason than stocks are too high. Momentum is a powerful force; just ask anyone foolish enough to short 4,400, 4,500, or 4,600.
This will top and turn into a great short at some point, but it needs to top and start going down before we short it.
I locked in some fantastic 3x ETF profits Wednesday afternoon and Thursday morning. Now it is time to get ready for the next trade.
I’m most excited about shorting a near-term pullback. But I’m just as happy to buy the next big short squeeze up to 4,800 if that’s what the market wants to do.
Smart traders wait for the market to reveal its hand before committing their money. That’s why I’m waiting patiently from the sidelines, sitting on a big pile of profits from my last trade.