Did We Just See a Character Change in the Market?
Hello everyone,
This is week 18 of ∞ that I will be posting a written version of my stock market outlook.
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The key event was the market’s strong rally on Thursday after CPI hinted at decreasing inflation. The QQQ closed up 7% near highs and the momentum carried over into Friday.
Daily chart of the QQQ:
The weekly chart shows us taking out the previous 2 weeks’ highs and back above the 10 week moving average. The longer-term MAs are still looming above
The T2108 continues to trend higher. It formed a higher low 10/13
The McClellan Oscillator is back to “oversold”
Sentiment
The NAAIM has stayed steady near 53.
The Put call is at .8 after spiking close to 1.15
IBD is currently in a confirmed uptrend
Stock Market Outlook
Thursday was a positive expectation breaker and we saw stocks move strongly into the end of the week. Look for your setups and increase exposure as trades are working for you. As you get profit ensure that you will have a higher low in your equity curve.
We’ve had two days of strength, if this is real we will see the breadth and multiple groups continue to improve and setups become plentiful.
Take it day by day and manage risk along the way.
What To Look For (Same game plan as the last few months)
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
Brilliant work as always. Thx!