Stock Market Poised To Rally – Bear Market Just Not In The Cards Yet
The stock market is only a few percent from all-time highs, yet sentiment has the look of a market down almost 10%. People have become increasingly more negative. Why, you ask? They listen to the media instead of looking at data. They focus on geopolitics instead of modeling data.
Was 7000 the bull market peak on the S&P 500? Always possible, but not very probable. If you look on the right side of the chart you might see that the most recent three lows under 6800 are slightly lower each time. I like that. The machines are doing a good job of gunning for stops right under the market and forcing people to sell. The S&P 500 certainly has enough firepower to rally from here. The question will be if it can surge above 7000 or need rest first.
The NASDAQ 100 is below. That AI-heavy index has been left for dead lately. You know what I see? A trading range bound by 26,200 and 23,800. This index is also in a position to rally although it has become the weakest of the major indices.
All those bears crying about the stock market should look at the chart below. The stocks hitting new highs is not behaving like a bear market or large decline is imminent.
Don’t get me wrong. Everything is not perfect in the market. There are some cracks beneath the surface. A mid-single digit decline would not be shocking, but it’s not my base case here.
On Friday we bought MDY and IWS. We sold IWO and some DWAS. On Tuesday we bought XME, XHB, more MDY and more TQQQ. We sold MTUM, SSO, XRT, some QQQ, some XLC and some KCE.
