A Market View From Happy Hour - Raise Those Stops

If you've been taking part in this wild AI rally, then you're likely doing very well and believe there's more upside to come, or you would hope. This market can continue to extend well into being overbought as it did in early February 2023 before reversing and making new 2023 lows in the process. On this SPY SPY chart, the RSI was just under 70 and the VIX had reached a new 52-week low of 17.06. Today we're trading over 60 on the RSI and the VIX is once again close to making new 52-week lows. While these indicators don't tell the whole tale, they are an effective gauge at determining when the market moves up or down too quickly over time. The numbers we have today suggest we're very close to being up too much and that a downturn is imminent. In order to protect one's capital, raising stops here only makes sense.

Tomorrow's economic data is all about May jobs. Any overnight news of the US Senate making progress toward a debt limit bill being signed will also affect markets. A strong jobs report has been frequently discussed as potentially harmful to the FED's mission to bring inflation down to 2%. If people have jobs, then they have money, and they can do little about companies keeping prices high, especially when it comes to the costs of living. 

Today's candle made new highs, but could not close over the previous level set a couple days ago. The volume needed to go higher did not make an appearance. The day's movement fell within this sideways trading range we've been consolidating in for the past few days. Given the catalysts tomorrow, there should be significant volatility and it would be wise to raise those stops.

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