The portfolio is now 50% long in an overextended/overbought market that is prone to a pullback.
The question is: do I keep the winning positions such as XLE and JNJ here, expecting a pullback. Or do I ride the pullback ?
We can see that JNJ is at the top of its price envelope. Buying at the close of yesterday means that the R/R is about 1, indicating that the position will statistically be breakeven for the next five days (An expected profit of 0.07%)
XLE looks similar: stats for keeping the positions are neutral. The best buying spot is a pullback down to about $72, which is my entry price.
To be honest, both the JNJ EV pattern and the XLE MF are positive, meaning there is no reason to sell even if I fear a pullback.
The trade ideas for today are below.