Time to book profit.......

Indices have been on a roll for the last 21 trading days, here is the stat for last 21 trading days :

S&P 500        UP 13.56%

DOW             UP 13.99%

Nasdaq          UP 15.75%

In a normal year for indices average gains are 8%, based on historical average, we have almost doubled gains so far.

Here is another look @ RSI :

S&P 500        59.92

Nasdaq           59.93

DOW              60.42

Based on history, high 60's always result in pullbacks, but more often pullbacks can start @ low 60's also, as has been the case in recent months.

The question is why did we rally so strongly ?

First, we were deeply oversold based on RSI in 20+ & 20% + slump in indices.

Fed was hawkish

Now the above 2 have reversed, we are getting overbought and Fed is dovish.

Shutdown is over for 3 weeks and may get messy again...

Trade talk resumes in DC but China  & US are miles apart.....

SO...all the euphoria about Fed being dovish is already factored in the market...

On a technical basis resistance is about 2% to 3% above where we are as of Friday.

Based on all of the above analysis, It is extremely critical to book profit and reduce exposure...fighting for last $$$ or last 5% is never a profitable strategy.....

Good luck with your own interpretation of this TAPE.

BLOG does NOT give buy or sell.

Saleem

Posted in: Mixed