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We've seen the S&P 500 move back above 3,000 for the first time since late February. It's back above its 200-day moving average, too.
For the bulls, this is good news: The technical breakthrough creates another opportunity for stocks to move higher in the short term.
So, by all means, enjoy the long-side profits. Just don't turn your back on the market. Don't rush in unprotected. This market still demands respect from investors who have even bigger portfolios to defend now; it could turn vicious in a heartbeat.
Valuations have rocketed higher, but the economic risks of the coronavirus crisis remain constant; high unemployment and extreme economic uncertainty are all but certain to persist through the summer.
At the same time, the "money migration" that was sparked by that same technical breakout above 3,000 is now lifting the financials, travel, and, importantly, small-cap stocks, is also a signal that we'll likely waltz down the primrose path into an overextended, "overbought" situation in the market.
That means hedging is more important than ever. Now, I've talked before about "paying" a little for portfolio insurance every month; that's easy to do.
About the Author
Chris Johnson is Quantitative Specialist for Money Map Press. He's obsessed with building and perfecting mathematical models that allow him to predict, with startling accuracy, the direction of the markets, entire sectors, and individual securities. For the last year, he's been researching and building a new system that lets him move swiftly in and out of the hottest stocks in the market for life-changing gains - entirely on his own terms. The results of his newly-minted Night Trader system are nothing short of amazing.