Weekly: A little rain, more on the way?

Markets down. Looks to me like a normal retracement after a big up move. I lose about 2% on the week. Are we on the way to new highs? That’s a stretch, but one down week doesn’t mean the market is toast. I took the head fake on Monday morning rally, then had to adjust most of the week. Took a big loss on leg of sold Amazon puts. I sold some way otm puts on Costco after their good earnings report. I got a little too negative and had to readjust again.

I’ve been writing for years on this blog about the red flags of a market top: look for an inverted yield curve, look for transports to lead the way lower, popular sentiment too bullish. Only the last one seems still okay, bullish sentiment hasn’t reached the masses yet. Sentiment is not a requirement for a decline, but big tops often have a lot of people bullish at the top. The other two are redline, transports are leading the way lower, the yield curve is flat, with slight inversions. So I am not overly bullish.

It is a “show me” market, and I remain mostly delta neutral on many positions. I have a slight bullish bias, but not much. So we got a down week, is more on the way? I am thinking any selling will be contained, that we are going to push higher. I remain cautious, as almost always.