If you has been following this blog, then most likely you might feel that you lost an opportunity and all those gains market made in past few days were lost. BUT, imagine a scenario where Congress failed to pass a deal then market would be down BIG time. In short, its game of probability and we try to stick to the side where odds of winning are higher which in turn means that the odds of losing are lower AND does exist.
What can we identify from below chart?
- BPNYA above 70 mark
- Volatility ($VIX) has fallen way below and is at the lower end of the range
Both items above suggest that market may soon experience pullback/correction/sideways action. Typically when BPNYA goes above 70 mark then its time to be cautious, expect volatility. Also when $VIX falls below 15, typically market has hard time to climb higher.
What does it mean for our Investments?
- 401K - If you are invested then stay put BUT if you are not invested then have patience. Market will present another opportunity to get in. DO NOT chase the market.
- Stocks/ETFs - Make sure you take partial profits and have STOP limit in place.
Market in bullish mode but be cautious...