January 2021

The first month of any investment year is key for market participants. This year we had a key down day on the first trading day and as of now, we are trading above the yearly opening print and lower than all-time high and yearly high.

On the other hand, I had had significant stress because of key events in the US that were not able to take the SPX lower. Based on my experience, the market might seem not to care much until everyone starts to care a lot and the price accelerates.

I think we are in a great position for a price acceleration, what I do not know is if we are going to trade higher or lower. Currently, I have lowered the exposure to the US Equities vs the beginning of the year and I plan to cut the risk even more in the next few days/hours. There two main reasons to lower the risk.

A. The trading system average holding position time is lower than 15 days. We are near the option expiration, this Friday.
B. Price accelerations are risky when macro get aligned. 1 USD is not getting weaker in the last days, Oil moved higher, Gold was able to shake weak hand his week and of course the Recent Political Events.

Here you can view a chart of the SPX YTD

Going forward, paying for some insurance might payoff.