Simpler Sentiment – Weekly Wrap-Up 2/24/17

Stocks have continued to climb this week, adding even more highs and still not showing any signs of weakness.

The S&P 500 is down slightly right now to 2360. It put in a new closing high on Tuesday and an intraday high of 2368 on Thursday. With the steady climb the actual volatility of the market has all but disappeared. The 10 day historical volatility is down to 4.5 percent, while the 20 day reading is just slightly higher.

That means that a VIX of 11.3 is a 150 percent premium to actual volatility. The VXST is down at 9.67, but still very high comparatively.

Our traders remained bullish as evidenced by the high market barometer at the start of the week. They are beginning to get cautious at these lofty levels, however and are waiting for Trumps appearance on the 28th.

Henry: I think stocks are getting a little lofty here, which means we probably have about another 10% to go. I’m going to continue thinking long, but focus more on short put spreads and keep position size a bit smaller until we see what the Squeeze in bonds will do.

Chris: I think the divergences between the DJIA, the German DAX, and the DJ Transportation Average cannot be ignored. But I think any big move will happen after Trump’s appearance in front of Congress on Feb 28th.

Tony: I don’t have a clue and when I don’t have a clue I don’t trade. You don’t need to trade every day to make money. You just need to make quality trades.

Tucker: The S&P 500 has traded around the Voodoo Tree Line of 2360.20 for the past 4 days. All trends need to take a breather at some point. I am expecting the markets to be choppy and sideways going into Trumps’ first address to Congress on Tuesday, February 28th.

Doc: The current uptrend appears to be fully intact. We are likely to get a minor pullback until after the State of the Union speech next week which would be a tempting opportunity to get long or add size to any stock index positions.

Did you participate in the Trade of the Week? Here’s how the trade is shaping up from the members of our Trading Team that participated:

Chris McKhann

Chris McKhann

Chris McKhann has been involved professionally with the stock market for more than 15 years and specifically with derivatives for 12 of those. He started as a stock broker, but quickly moved on to options and futures trading. He spent some time as the Derivatives Product Manager for TD Ameritrade. He was the chief analyst and hedging strategist for OptionMonster. He has been an options trading educator and content provider for many years. His writing and analysis has been featured on Reuters, the Wall Street Journal, Forbes, TheStreet, CNBC and internationally. He has also designed and traded option and futures strategies for prop trading firms and hedge funds as well as managed accounts.

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