Stock market update

Hi guys. I’ve been away for a month, not because of the markets, but because I was travelling and had a very limited internet access. And as I came back I see that not much has changed. Liquidity is getting sucked out of the markets, strength is being sold into so the markets are going down one by one.

Stocks have so far been hit quite hard, some more than others (see 1, 2 and 3), oil has been killed and don’t me even get started with cryptos (see Expecting a move in Bitcoin).

I would like to see a change though, but until we do we need to be defensive and err on the short side. Let me give you an update about the markets and what to look for going forward. 

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From tech to financials and energy?

One of the characteristics of a trending stock market is sector rotation. In a bull market not all sectors are necessarily trending higher and sectors are taking leadership in turns. This means that some are bound to outperform while the others are under performing. Sector rotation is a very important fuel of a bull market. So identifying sector rotation is crucial to be successful in the stock market. The phrase past performance is not an indication of future results is something that applies here very well!

We’ve seen increased volatility in the stock market this past week. I think that the reason could have been due to a rotation and not because a major top is forming just yet.  Read More