Although the Senate fiscal bill has not been voted on yet, it appears to be a done deal. Traders are "selling the news" after a brief short squeeze but there appears to be some support. Breadth is just about dead even and the number of new 12-month lows is just 49.
As I've been discussing, I feel this is an opportunity to reposition and I'm using the strength to dump a number of positions. I don't have much long exposure but I now have even more cash on hand.
The biggest obstacle that most people have to deal with is the fear that they are going to miss out on a market that goes straight back up. While that is always possible, I remind myself that I can always buy back something that I've sold. If I do have to pay more in the future, it will be worth it because I have reduced my risk to some degree.
I view this action as just another step in an ongoing bear market. That bear market is not going to end today because of the stimulus deal. The better likelihood is that the market will bottom when it does not go down on more negative coronavirus news. We still have no idea when that might peak and there will be no clarity until it does.
The primary goal in a bear market is to not lose money and to be highly opportunistic as new opportunities arise. Shorter time frames help to control risk when volatility is high.
I'm extremely optimistic about the opportunities down the road and even more so because I don't think the worst is over. While the massive stimulus is a market positive and will be jet fuel for economic recovery at some point down the road, there are short-term issues that should not be overlooked as we navigate the market.