A Method To My Madness

Many are likely wondering why I was so quick to remove my hedges if I am cautious at current levels. I believe that we are at risk of a correction of 5% or so but don't believe we are at  a longer term top. Coming into the day I was pretty close to market neutral, which was a little aggressive given my outlook.

I believe there is still risk of a further correction as sentiment remains stretched. In the past few weeks I both sold down longs and added hedges. I am going to wait for a deeper correction before adding back longs. Seasonality turns positive next Thursday according to the trading calendar I shared last week. Ideally, I would like to see a decline through the middle of next week that moderates the excessive bullish sentiment in order to add back longs.

 

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