I don't know if the market will experience its first 1% drop in 2 months anytime soon but I am going to sell off my index positions at this point ... if we begin to make new highs I will reassess but for now I am going to sell the TNA ETF, originally bought 3/29 for about a 7% gain and some call options I bought Friday afternoon hoping for a better Magical Monday + Greece bailout bounce. I had a nice profit on the calls but with the smallish pullback on the S&P 500 that has disappeared
All these overbought indicators - including 93% of stocks over their 50 day moving average have not mattered for a long time. So I don't know when they will matter. It is simply hard to justify risk reward after a 11-12% move straight up (and much higher in Russell 2000 index) - so far 2010 has been a good year, so no need to take outsized risks here. I also am wary because the gaps we need to fill on major indexes are about 9.5% away and this market has yet to correct more than 10% since March 2009. So if we move any higher, it will be the first 10% correction - which will be a new development.
The market is so tired of going up, even True Religion (TRLG) is faltering....
For those keeping track at home, the 6 day moving average is 1189.