SPX All Time Highs

Before we look at a single chart let me make the following crystal clear: Do not even think about stepping in front of this speeding train. And don’t think for a minute that you know anything – anything – or that you are smarter than the next guy reading this. If you were you would have loaded up on equities hands over fist in early March of 2009. Yes, we know – you’re a precious little snowflake – fine. Let’s see how you hold up once you descend into the daily furnace of trading for a living. We’ve been doing it here since 2008 and guess what we’re still here.

Alright, after the mental adjustment you are ready to proceed to the charting section of this post. Do you recall the long entry I was pimping as the spoos were painting a pretty defined hammer candle on the daily panel? I hope you flipped your shorts for a long position as prescribed. If you did then I strongly suggest you take profits. Not because I don’t think this puppy can run much further – good chance it will. However on a technical level we are in completely no-man’s land right now – there is zero context and that’s not good for business.

Well, as it’s a special occasion let’s take a quick stroll down memory lane. On October 11th 2007 the S&P 500 briefly touched a high 1578.09 – it fell back quickly that day, which turned out to be a precursor to what was to come in 2008. It took four years to erase the damage inflicted throughout 2008- finally today the SPX clawed its way above its old record and even added ten handles for good measure. Of course nothing really changes from here on out. We managed to fly along this far by the seat of our pants, thanks to constantly improving our game and by maintaining a level mindset. Perma-bears – please accept my condolences – rest assured your money is being spent most unwisely.

But let’s not rest on our laurels – there is a reason why I suggest caution here. For I see signs of trouble and it would not be atypical for this market to let the other shoe drop post haste as after retail piggies have been anxiously piling back into equities lately. Congrats for being fashionably late to the party – we’ve been climbing along every step on the way but let’s not resort to gloating (well, just a little).

But I digress – the signs of trouble – yes: Above you see my short term edition of the VIX:VXO ratio and it’s distinctly lagging behind today. May just be a glitch in the matrix as they say but I’d keep my eye on that. However it was good enough for me to pull myself out of equities and call it a day.

And while we’re at the subject – the VXV:VIX ratio is looking even more divergent. And in plain old vanilla English this means that market makers are pricing in a bit of front month risk here. So be nimble – no issue with keeping a few lottery tickets running but don’t be surprised if you wake up one morning and see them cut into pieces. These things usually happens when you least expect it. Hey, who said trading wasn’t fun! 😉

A few setups for the subs – let’s get to it:

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Cheers,