Monitoring The Stock Market Top

Is Anticipation Investing Hurting Your Portfolio? | Seeking Alpha



Here is another outstanding article by Chris Ciovacco.  He underlines the fact that it is a fool's errand to predict exactly what the stock market will do next.  The S&P is confounding a lot of people by making new highs.  A diversified portfolio and strict allocations in different areas will protect you in a market with weak directions.  I hold more than 15% of my portfolio in high paying dividend stocks.  I am getting paid during all the stock market turns.



However, there are certain signs that can approximate a crystal ball in predicting the stock market direction to some extent.  One of these signs that Chris mentioned was the S&P 500 long compared to the S&P 500 short (SH).  If this chart is going up, then your main bias in the stock market should be long.  When the chart is going down, you can probably make money shorting stocks, but you must take profits when you have them.  For example, you should have some predefined point where you will lock in your profits, like 10% if the trading cycle is short.