Ringing The Register

With a 52-week high of 459.44 the $SPY eclipsed 20% year-to-date return.  Not too shabby for any asset in the span of a little over 200 days; but the time to sell has come.  Selling is a hard business.  Sometimes we sell at a profit target; others, on a stop-loss.  And if you’re like most of us, you sell because you plain and simple need the cash.  But no one likes to talk about this.

We don’t need the cash, so the last example is not the reason.  We did not sell on a profit target; I recently projected the SPY to eclipse all-time-highs by a small margin this year.  This is no longer the case, and quite frankly and unapologetically, I have changed my mind.

We are ringing the register on a stop-loss, still up a hair over 15% for fiscal year 2023.  Not bad and honestly above the average expected 12% annualized return.  On the chart attached, a weekly candlestick chart of the SPY contract, the weekly closing price is below the 8-week exponential moving average for the first time since March.  That was our stop loss, literally the stop of losing money, the exit.

This doesn’t mean that higher highs aren’t to come; just that near-term, we are accepting of our profits, humble enough to change our mind, and disciplined enough to follow our strategy.  If we end up being wrong, so be it.  But I would much rather be wrong up 15.01% than to be a lot of things, and that is the energy of protecting profits.