VRT - Indexes Are Inching Higher With A Narrowing Set Of Stocks What Now?
2024-06-16 22:28:06 ET
Summary
- In my caution last week I did some mild hedging with minimal losses, hedging is a form of insurance. It is best executed before an event that could roil stocks.
- Being bullish doesn't mean blind loyalty to your stocks, but rather a focus on facts and awareness of potential changes in the market.
- We now have a narrow set of stocks propping up the market indexes, watch for a broader rally in order to trade in the current environment.
Before we get into today’s topic let me address last week’s premise.
Last week I was cautious about a “Double Whammy” coming for the prior Wednesday . This was regarding having the CPI and the FOMC meeting on the same day. I was cautious about the market going into 2 macroeconomic data points in one day. I prescribed several actions to hedge on Monday and Tuesday, closing out the hedge before the market closed on Tuesday. Hedging should be looked at as setting up an insurance policy so that if there were a sell-off, the hedges would move in the opposite direction and balance any losses. My losses going into the close of Tuesday were minimal, partly because I was careful not to overdo the hedge. I also picked up some long trades as well. Insurance is something you gladly pay to mitigate the risk of larger losses. Wednesday worked out fantastic for the Bulls and my long positions. Also, I did stress that no one should be selling their investments and that I was still quite bullish. I have closed out all hedges except for some Call Options on the VIX which I will address later....
Indexes Are Inching Higher With A Narrowing Set Of Stocks, What Now?