Will the market make new Lows?
Hello everyone,
This is week 16 of ∞ that I will be posting a written version of my stock market outlook.
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Last Week’s Action
After an initial push higher early in the week we closed right back near year to date lows.
We remain below all the key moving averages
Daily chart of the QQQ:
The weekly chart shows us closing right near the open. We are still in a Stage 4 Decline
The monthly chart shows how this is the most significant correction in quite a while.
The T2108 remains in the 20s
The McClellan Oscillator is still in the middle of its range
Leadership
Biotech and Oil and gas names are the strongest areas at the moment. Solar has regressed somewhat over the past few weeks.
Sentiment
We saw a decrease in bullishness. For reference in march 2020 we got down to 17%.
The NAAIM increased to 38 this wednesday
The Put call is actually dropping.
IBD is currently a market in correction
Stock Market Outlook
Another negative week after another poor reaction to a news vent. We remain in a downtrend and action should be limited unless you are a skilled day/short term swing trader.
This is a great time to be studying and working on improving your system
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
Excellent analysis overall. Please continue this on a weekly basis. Excellent supporting evidence!