My Market Bias Is Shifting

 | Jun 15, 2017 | 2:16 PM EDT
  • Comment
  • Print Print
  • Print
Stock quotes in this article:

spxu

The indices are holding support and drifting back up but it is slow action and breadth is solidly negative with about 1,600 gainers to nearly 5,000 decliners. The number of new 12-month highs is below 100 while new 12-month lows are around 135. These are the worst internal measurements we have seen in a while.

I don't make big loud market calls but my market bias is shifting. I'm taking a much more cautious view and am positioning for further downside. I don't expect it to come easily but the combination of weakening internals, seasonality, the struggling FAANG names and the lack of leadership is pushing me to be more negative.

Ultimately my market posture is a function of my ability to find bullish "setups." I've been struggling with that for a while and see almost nothing I want to buy right now other than some plays for oversold bounces. If I see some good charts I'll buy them but the fact that I don't see many is causing me to put on some index shorts, too.

If you are holding some index shorts it is important to note that both the S&P 500 and Nasdaq 100 go ex-dividend tomorrow. All related securities such as the ProShares UltraPro Short S&P500 (SPXU) will drop at the open by the amount of the dividend (or 3x as the case may be). You will recoup the money but not until the dividend payment date, which is July 27. For money managers, this can be an issue because it may reduce their returns if they don't include a receivable for dividends they are owed in making their return calculations.

Just be aware of this accounting irritation. You are out the funds for a little over a month but the net effect overall is zero.

Columnist Conversations

We will take off some more risk, bank some winners SOLD PG OCT 90 CALL AT 3.3 (in at 2.90) ...
After a very calm and sedate period of volatility which saw the VIX fall not only to all time lows but had a r...
today is a good day to lighten the load and take some positions off the table. SOLD WB OCT 85 CALL AT 11 (i...
I reached out last week to my close friend Ken Shreve, who is a prominent writer for the IBD.  I asked Ke...

BEST IDEAS

REAL MONEY'S BEST IDEAS

News Breaks

Powered by

BROKERAGE PARTNERS

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.


TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.