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Micro/Short-Term view…Support at (1) remains in place. Bullish downside wicks took place (highlighted in Green) followed by some upside action. Last week two upside wicks took place, which often leads to lower prices.
Macro/Long-term view… Key Support remains in place at line (2), yet at the same time resistance dating back many years remains in place at (3).
Game Plan….With key support/Resistance at hand, investors should not be surprised by sloppy back and forth action (500 index remains within 2 points of its 2/18 high this morning)! Unless you are a day trader, patterns would suggest that being long or short won’t be big time productive until a breakout/breakdown takes place.
Favored long positions due to this situation, PFF and the high yield complex, both yielding/paying investors around 6%-7%, while we wait for these patterns to prove themselves. IF support gives way, which it HASN’T at this time, do respect the potential that the “Great Escape” could take place! (see post here)
Favored defensive position….We do own a position in RWM, attempting to score on defense, with a 2.5% trailing stop.
