Thoughts On The Recent Market Action, part II

I wanted to add, to my fundamental rationale stated in earlier post, that the technicals are also indicating that the odds of a pullback now exceed the odds of continued rally. The short term indicators are both ovebought and show divergence with momentum indicators like RSI and Stochastics. While we witnessed a 52 week highs on the broader indicies, these indicators clearly failed to confirm.

Additionally, the last few days, we have seen a lot of rotation and on UP days (some stocks were up, while others were down), while on DOWN days,it seems to be more uniformly red.

Lastly, the intraday volatility has picked up, which is indicative of a nervous market. More reason to be cautious.

Don't panic. Stay long your high conviction ideas, sell covered calls, but dont short this market. Not yet. There is still a wall of worry and plenty of pessimism out there.