Making It Hard

Had the market rallied hard anytime before today it would have been an easy decision to fade the strength for a short term trade as we were overbought. However, the worst of the overbought reading wears off at the close today. The market alleviated its overbought reading by going sideways for a week.

Pinpointing the next overbought reading is difficult because the market has been choppy. If we rallied through Thursday we would be overbought, but it would not be a great reading. Pinpointing a selling point will be tricky and I will need to rely more heavily on when we start seeing giddy sentiment.

I am not looking to go short but simply looking for points to reduce my long exposure. After big washouts like we saw this Summer and Fall it takes a lot longer to form a top as market participants have low levels of exposure. Even after the 20% rally from the lows I suspect large market participants are not anywhere near fully invested.

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