How to Prepare for a Market Downturn

THE WEEK

Three of the five trading days this past week the Market hit new 52-week highs.  And the SPX top over $5,000 mark for the first time ever.  Here’s a look at the SPY which trades 10 less than the SPY but you can see the volume of this ETF.  There is nothing unusual about the volume, in fact the last push up was lower than normal volume.

LOOKING AHEAD

Unless additional monies flows into the Market with higher trading volume, I do not believe we can sustain the same upward movement for much longer.  The Market feels a little frothy right now.  I anticipate a down period soon.  I do not believe it will be a hard down or that it will last long.  Just be aware and if you see it start to happen re-think your trades.

In March another FOMC meeting is scheduled (March 19-20) with an announcement following about how the Feds will handle interest rates.  I don’t think there will be any changes at the time.  I anticipate the first rate reduction in the May announcement.  The market should react positively with such an announcement.

The Presidential campaigns are chugging along with no new surprises.  The only comment I have is I am finding the whole situation of intrigue and lawsuits embarrassing.  The predominant public feeling is apathy where I live.  The good news is it doesn’t seem to be affecting the Market much

HOW AM I DOING?

I had a decent week getting slightly better than the gains in than Market.  I still haven’t hit my stride this quarter.  One trade every week seems fouls my total profit picture.  All that means is I need to work a little harder.

This Week’s Deep Dive will cover one of my favorite trading strategies

Credit Diagonal Spreads

fondly called Money Press Trades

The main focus will be on the dollar spread between the long and short positions