While many market participants and talking heads were watching the SP500 trying to reach a new all time high, the DJT, Nasdaq composite, and the Russell 2000 failed to make a new high. So what is the significance for the SP500 to close with a new all time high after today’s performance? Not much! The reason it doesn’t have much significance is the market is not waiting for the SP500 to help propel it into a new uptrend. To the contrary, the market appears to be waiting for the remaining index, the SP500 to make a new all time high.
Am I calling a market top? Absolutely not. I am not in the business of calling market top or market bottom, I leave that task for the pundits and the talking heads. I learned long time ago it is a fool’s game to try to call the market. What I try to do is to read the market and decipher the message it sends. Sometime I get it right and other time I get it wrong. But one thing I know from years of watching the market is the market will send out signs that it is about to change direction, and some of those signs are starting to appear. Therefore, I will continue to trade defensively by reducing position size and exercising tight stops. I would rather be out of the market wishing I was in than trapped in the market wishing I was out.
