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The market continues to grind up to new all-time records, but optimism is now much too high. The general investing public is perhaps more optimistic than I have ever seen, and investors are in an almost euphoric state of bullishness.
However, as many traders have learned the hard way, the market is always trying to fool you, and it usually does the inverse of what the majority of people think it will do. Typically, when everyone thinks that the market will rise, it does just the opposite, and I believe that’s a very negative sign right now.
In my opinion, this extreme bullish sentiment and the fact that valuations are significantly overextended tells me that we could see a 10%-20% correction in the near future. I cannot say exactly when this might occur, but that’s why it’s always necessary to maintain some amount of insurance in our portfolios.
For that reason, I’m recommending a bearish play on Brixmor Property Group (NYSE:BRX) this morning:
Buy to open the BRX May 15 Puts (BRX180518P00015000) at $0.40 or lower.
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