Technical conditions remain conflicted. The markets recent action absolutely reflects a rotation away from the Nasdaq and most things tech and a move into energy, financial and so-called “old economy” sectors. Usually, even though disruptive, action like this leads to a broadening of the bull market.
While the strength of the past few days has been encouraging, it in no way means we are out of the woods yet as far as possible additional selling waves and lower index prices within the next few weeks are concerned. We are officially on day 4 of a new rally attempt and waiting on a follow-through day to confirm the buyers are starting to return. Investors Business Daily does excellent work on “follow-through” days and is a must read for serious investors.
With last nights technical readings and this mornings price action, our Current Market Outlook has been upgraded to “Uptrend Under Pressure” with a yellow light. The TPM “Core Four” internal indicators are at 1 red and 3 yellow. The net result is a yellow light- a caution condition. We are still defensively positioned in our strategies but began committing capital back into the markets in certain strategies during the past few days.
The volatile and violent sell-off in the Nasdaq over the last 3 weeks turned out to be a 12.5% correction (red condition). Thank God our strategies were positioned to be immune to the vast majority of that loss.
Interestingly, the Dow Jones Industrials and Transportation indexes held up remarkably well during that period and are already at all-time highs. Clearly a bifurcated market. While these types of market conditions can be very challenging for novice and professionals’ investors alike, maintaining and updating a prudent plan of action, as we do, can make a huge difference.
What should investors do now? Keep updating your watchlist. Look specifically for stocks/indexes hitting new relative strength highs. Be flexible. The end of the 1st quarter may cause certain “window dressing” effects over the next 3 weeks.
Have a Triumphant day! ®
The information in this article is based on data obtained from recognized services and sources and is believed to be reliable. Any opinions, projections or recommendations in this report are subject to change without notice and are not intended as individual investment advice. Not to be used as legal or tax advice.
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