SPY Hitting Euphoric Levels Again

All the sudden things are turning positive and SPY is breaking out of the downtrend and racing back to all time highs. Looking at the political environment, the economy and the virus you start to see how disconnected the stock market is. Once you realize that The virus is impacting people and small businesses most which actually helps the stock market because small businesses are not traded publicly. As the small businesses fail their consumers will go to the larger publicly traded companies that have the cash to survive. The virus also allows for a government intervention on the markets with the federal reserve printing money at a record pace essentially holding the markets up. The virus also put stimulus tax on the table for money to be giving small businesses and individuals to help keep spending. All this is terrible for the dollar but seems to be good for the markets.

As you can see from the one minute chart below we are racing towards 350 at incredible pace. Personally I’m super Barash, but I can’t be Bearish in a market like this. Lessons I’m learning are bad is good and good is better so all these people who are buying the dip are constantly rewarded. I may sound a bit bitter, But it’s created a whole group of gamblers instead of investors and so far it’s worked out pretty well for them.

This week we have an onslaught of earnings that I think could derail the market. Banks Report this week which the stimulus talks deflate in the US dollar, low interest rates, default and various regulation changes I’ve made it hard for some banks to make money so I expect some reports to be bad. However, banks like Goldman Sachs who do a lot of trading should have better earnings considering the volatility we have seen.

Tell the question is how my positioning my trades this week? I think I might buy some protection looking at the 348 puts expiring in 2 to 3 weeks. I will continue to hold my long positions and add more on any dips. If we don’t see any pullback by Thursday or FridayI’ll probably take that protection off on a dip.

I will say bye in protection has cost me a lots of gains. I’ve also been over allocated and bearish positions and my account has suffered. How’s your trading been this year?

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