I would like to think that SPY is kind of overstretched at this juncture. Nevertheless, it may not have reached the ‘irrational exuberance’ stage.
My ‘technical’ reasons for an overstretched SPY:
- Exceeded the upper bound of Keltner Channel (2.25)
- MACD – reached the highest peak
- RSI – overbought
News like this don’t pain a bright future for the US market.
I would love to believe that there will be an immediate pullback in the next 1-2 weeks, towards the 320-330 mark before rising further. To capitalise on my hypothesis, I bought a credit call spread on SPY as follows:
- Short 369, long 371
- OTM: 83%
- DTE : 50 days (16 October 2020)
Disclaimer: This post is not an endorsement or investment advice. Please refer to the general disclaimer of this blog.