I’ve been very quiet in the past month. The reason is that I was intensively working on a new product I will announce in the near future. Sometimes you just got to lock yourself in a room if you want to get things done. Focus is so underestimated thing nowadays. It’s just impossible to deliver a high quality product if your mind is all over the place.
Anyway, more about that when time is right. I want to discuss the market with you. Since my post Is it over? the stocks rallied a lot and most have already forgotten we’ve seen a mini crash in Q4. However, the problem is that, while I think there’s a good chance the bottom is in, the current action does not look like a Typical bottom. So, what to expect next?
The market is behaving very constructive as of late and it’s not far fetched to say the S&P 500 could continue going higher to above of its 200d or up to somewhere 2,800 level – the purple area.
The strength is also confirmed by the major sectors such as Tech $XLK, Financials $XLF and Biotech $XBI as well as sub-sectors like $HACK or individual stocks like $TWLO, $TEAM or $NOW.
But I also think we must be prepared for some back and filling or shakeouts in the coming weeks. $SPX is up 16% from the bottom formed on 26th of Dec, which was 26 trading sessions ago. If it goes to 2,800 that’d be almost 20% in say less than 2 months?
If you think moves like that are sustainable without at least a lengthy consolidation over time or some kind of a shakeout, then I’d say you’re crazy. On the other hand, however, if my thesis is correct so that the Doom and Gloomers are not right, I’ll be looking for pockets of strength when we do see a consolidation or a shakeout, and I think so should you.