Tricky Juncture

The market is at a tricky juncture. Sentiment is excessively bullish and we have not had a real gut check for the bulls in months. However, we are a week away from the seasonally strongest three week period of the year. Often during these seasonally strong periods we see extreme optimism become even more extreme. This makes for a difficult decision as both the bulls and bears can make a good short term case.

There is still room this week for a correction. If we were to see some corrective action this week I would be willing to add moderately to my long exposure heading into strong seasonality. However, if the market keeps zooming ahead I would likely tighten my hedges up. Under normal circumstances I would be market neutral or net short right now but as a result of the positive seasonality I have medium sized long exposure with some April SPY puts for protection.

2 comments:

Weekend Reading #11 – Finance and Investing Links for 3-31-2012 said...

[...] The Market is at a Tricky Juncture – Capital Observer [...]

Hard Money Lenders said...

What kind of long exposure do you have?  If it is in commodities and precious metals equities I'd say you are in good shape.  U.S. consumer driven stocks, not so much.