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SharePlanner Reversal Indicator: Some Waiting Is In Order
This a market you have to be careful with in terms of getting heavily long….or short for that matter.
The bears are not showing enough strength to merit a descent amount of short exposure and the bulls are so overbought that the risk:reward ratio is heavily skewed against them. As a result, I have to be nimble in the amount of exposure that I am willing to take on in this market. This is part of trading. There is always a degree of uncertainty, but it is the level of uncertainty you have to weigh your market exposure against.
When the market is as overbought as we have seen in the past 3-4 years, then yes, some increased caution is merited, because if the market ever does decide to work off these conditions it will be fast and furious.
So right now I am net short, but will likely be cutting some exposure here before the close as you have that dill-weed Mario Draghi talking tomorrow and God knows how much he loves to artificially inflate global markets.
At the end, managing risk is all that matters and that is all that I am going to do here.
Here’s the SharePlanner Reversal Indicator:
Ryan Mallory is the co-founder of SharePlanner Inc, a financial website devoted to Day-Trading, Swing-Trading (both long & short) and exchange-traded funds. Ryan makes a strong emphasis on risk mitigation strategies, trading transparency, and trader education – not to mention a great set of stock screens as well.
Be Sure to Check out Ryan’s Site at Shareplanner.com
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