In my June 25th post I explained why I was a buyer of the dip in the markets. I purchased several ETF’s on that day at a time when the S&P was trading at the 2710 area.
Today I took profits on those positions as soon as the S&P hit 2790. I didn’t anticipate this level so quickly. I was a little early in buying the dip and I’m probably early at taking profits. Don’t think for a moment that I feel this rally is about to end. Quite the contrary, I believe this rally will extend to the 3100-3200 area (basis the S&P 500 index). I took profits because the market is overbought in the short term and a 50% retracement of this recent rally (or 40 points in the S&P) would be a healthy pullback and not at all unusual. We are far more likely to see new highs than new lows.
I’ll be looking to re-enter ETF’s on this forthcoming pullback.