A Few Reasons I’m Stepping Back
YELP. PING PONG. Just look at the chart above. This bellwether name for beta technology has wobbled around aimlessly for three months. It tried to rally pre-earnings, then was hammered the next day. A pretty serious false breakout, usually a terrible bearish signal (yellow box). Then, only a few days later, the stock didn’t follow through to the downside, now sporting a false breakdown - which is actually bullish(grey arrow). Pure randomness. And here is the key indicator for me: a flat 200 day moving average (dma) over the last month (grey box).
Yes, we are only talking about one stock here. Trend followers will say “there are other stocks out there”. I know, I’ve been long TSLA, but that is only one stock. The S&P 500 has been dancing around support for days now. Not giving bears follow through and not giving bulls the snap back that they wanted either.
To me, YELP is indicative of the current environment. Naturally, I’ve been getting stopped out of some positions which has me heavy in cash. While I’m eager to step back in the market and put money to work, I’m stepping aside and letting things reset. If you’re purely looking at the equity market here, I think being long patience is the best stance at the moment.