Bear Market Rally or Something More?
Hello everyone,
This is week 17 of ∞ that I will be posting a written version of my stock market outlook.
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Last Week’s Action
The market continued its short-term uptrend last week despite negative earnings reactions from the mega caps. We ended the week near highs.
Daily chart of the QQQ:
The weekly chart shows us closing right near the declining 10 week moving average. On a monthly chart we are putting in a reversal bar.
The T2108 continues to rally
The McClellan Oscillator is “oversold”
Sentiment\
The NAAIM increased to 53 this wednesday
The Put call is below 1
IBD is currently in a confirmed uptrend
Stock Market Outlook
We are currently in a potential tradable rally. Biotech and pharma stocks appear to be the strongest at the moment. I would like to see more leadership groups develop. Many stocks are short-term extended so I would not mind seeing a few consolidation days.
Take it day by day and manage risk along the way.
Stock Market Outlook Video
What To Look For (Same game plan as the last few weeks)
When it is time for a new bull market we will see divergences as groups decouple from the indexes and show relative strength. Setups will proliferate your screens.
When the market is ready it will be obvious, and it may happen when the news and sentiment is the absolute worst.
The leaders in the next bull market will once again have the potential to quickly double and triple and they will likely be completely new names that are unfamiliar. Try not to become biased and focused on last cycle’s winners.
Follow the sector, industry group strength, and look for the strongest stocks coming out of these strongest areas. As the market bottoms these future winners will likely be completing bases and may even be making new 52-week or all-time highs.
Keep an eye out for turnaround plays with excellent earnings and sales growth as well as recent IPOs within the past 2 years forming out their first proper bases.
Have patience, preserve your mental and financial capital, and be ready. Stocks can shape up faster than we think.
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Have a great weekend!
Richard
great comments and analysis once again
thanks for your effort in helping others
With the value rally, particularly in the Dow, what do you think about growth going into a recession in 2023, mega cap tech weakness seems to me like a pivot point for recessionary growth.