Good morning and Happy Friday.
Payrolls beat estimates and clearly the economy is getting stronger but not so strong for it to cause more inflation. The lack of a returning workforce is the missing piece of the puzzle. Markets broke out into all-time highs continue to seem to want to move higher. Are you all in or have you been selling into this rally?
For me, I am holding my core positions and closed many of my trades that were profitable. I am currently sitting on more cash than I have in several months. This has not been a recent decision that I have made but one that has forced me to do so based on my trade plan.
If you compare this rally to the last one we had, there are a couple of similarities. The rally from 3/25 to 5/7 lasted six weeks and was a 10% move. The rally from 5/19 to now has lasted just over six weeks and the move so far is 6.5%. So does that mean there’s more to go. The last rally had greater momentum than this one so there is some divergence. That is a red flag but it could just mean that there has been more cautious. Looking below at the chart, you can see what happened after the April rally ended. Just be prepared.
Talk soon,
Al Losada
Founder | SimpleOptionStrategies.com
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