Momentum Monday – Trying To Be Patiently Constructive

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Good morning.

I will get right to this weeks episode. Ivanhoff and I tour the market as always looking for trends and momentum. You can watch this weeks episode right here. I have also embedded it below on the blog:

Here are Ivanhoff’s thoughts:

After a few up weeks in a row, the stock indexes finally had a down week. Interest rates are slowly rising again, and so is the US Dollar. Those factors have been big headwinds for stocks this year. The big question is if this is just another pullback to a rising 20-day moving average or the beginning of a new leg lower. The groups that led the market higher in the summer – biotech and software, are already below their 20-day moving average and the indexes are starting to stall near areas of technical resistance.

The good news for the bulls is that there are still plenty of decent-looking long setups and the market continues to react positively to most earnings reports. Even last week when most stocks were under pressure, we saw companies beating earnings estimates like GLBE, WOLF, and BILL breaking out in big volume.

From a short-term psychological perspective, we know that the stock market tends to zig when most people expect it to zag. After a few up days in a row, most are getting FOMO and turning wildly bullish. Then, the market pulls back for a few days and all of a sudden, everyone is getting bearish. This sentiment cycle repeats over and over again in both bull and bear markets and in different time frames. We will see if next week will be any different.

I want to be constructive on the market, but there are not any good trends in growth. Only the Utility stocks are at all-time highs.

The quants and professional traders are going to lean against that 200 day moving average that the S&P just hit from below.

The big problems that the market had back in June, pre rally, are not gone. Rates are elevated and the US Dollar is really strong. This continues to hit technology stocks the hardest.

There is just a lot of competition for the cash sloshing around.

I like the piece from ‘The Rotation Report’ titled ‘The Great Reallocation‘. Have a read.

The USA and S&P are the still the best house in a shitty stock market global neighborhood.

Real estate prices are still the big unknown. If they tip over to the downside, it will be harder for the next rally to have legs.

Have a great week.

Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security. For full disclosures, click here.





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