Since the week ended September 30th through last Wednesday, cumulative inflows into U.S.-based equity funds have totaled $11 billion (courtesy of Lipper). That’s it! The above-mentioned 13-percent rally was not enough to tempt new money into action.
S&P 500 – SPY Nears Major Support Levels
As things stand now, the momentum is with market bears. But the bulls can still regroup and put their foot down near the 50-day moving average (200.63) or 198-199.
The 50 day moving average is still rising, but depending on what transpires in the next several sessions, it could begin to go flat/down. The 198-199 level is even more important for stocks, with the ETF having broken above it five weeks ago. What happens here probably decides if the ongoing selloff gets extended or takes a breather. On a weekly basis, there is plenty of unwinding of overbought conditions left still.
It is a decision time for SPY shorts – whether to continue staying short, cover, or stay short but at least deploy options to better position for it.
Now if we assume that the bulls would try to and defend – at least near-term – the afore-mentioned support (50-DMA/198-199), it is probably not a bad idea to cover or hedge if you are in the money. But we can also think of a scenario in which (1) the support is not saved and/or (2) it is saved, followed by sideways action this week.
Thanks for reading!
Twitter: Â @hedgopia
No position in any of the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
