The stock market is showing signs of fatigue the last few days. As the end of the month/beginning of the month period draws to a close, which we usually think is the jobs report on the first Friday of the month, the market didn’t show that much strength, except for last Thursday when the Fed Head suggested a Pause in interest rate hikes. We see the momentum (technical) indicators register a very tepid “strong” period and wonder if the rest of the technical community sees the same thing.
Whether they do or not, the stock market is making it very clear that the end of this rally is upon us. That is not surprising as May tends to be the time to “Sell in May and GO AWAY”, oh sorry. At least the technical picture certainly is flashing red right now. With the prices so high and the momentum waning, what could be better than selling some stock to reduce your exposure? Well, one of our readers thinks that selling covered calls would be a good idea and that is an acceptable strategy in a flat to down market. With our version of down markets, maybe a stronger approach should be employed, like selling all together or buying protective puts.
We don’t think the news of the day requires any time in the posting tonight due to the pressing nature of the market’s position. The problem with waiting is that you might miss quite a bit of the fall. On the other hand, there are reasons to wait to be more sure. One that we can think of is that we have had several of these false tops over the past several months. The situation as it exists now is a little different because of the calendar and the weakness in the momentum indicators. Either way, this is a very good time to be paying close attention to your positions.
We would say that the standard technique for looking at your stocks is to see if they are participating in this “big cap” rally. If so, you may be able to relax but, if not, you should take action.
Remember to “Sell in May and GO AWAY’ and to Be careful out there…
Friday brings the jobs report—we will review the situation in tomorrow’s post, be there.
Dow Industrials: 11,400.28 -16.17
RYVNX: 18.77
RYAIX: 22.15
TLT: 83.24
BEGBX: 13.35
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