Taking A Step Back

Various indicators are showing signs of excess bullishness in the market at the same time that the market is still somewhat overbought. Normally, I would not mind taking the other side of that trade by going short the market. However, I try not to short the market at this time of year as it is usually not a money making strategy.

I made an exception last week and went net short because there were over $30 billion in new share offerings led by Citigroup and Wells Fargo. The market took a small hit and seems to be bouncing right back as if nothing happened. I am shocked as even during this time of year $30 billion is a lot of money. I am not sure that there ever has been a week with that much new stock offered.

I would not be surprised if the market does finally have a correction over the coming weeks. That said, I moved to a more neutral posture late Friday as I have given up fighting the market for now. Most of my long exposure is in the healthcare space while I am short SPY as a hedge. I should do fine if the correction finally does arrive.

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