Major stock averages ended the week the way they have traded throughout the past few weeks. With resilience. Stocks started off the day on a solid note but sold off to new intraday lows by midday before bouncing back and rallying into the close with the Nasdaq closing near its highs of the day. While it was not a great week it certainly was a good week as stocks held up relatively well compared to their very overbought technical conditions on a short and intermediate time frame. The longer the major market averages can hold up while working off the overbought conditions the better the odds are that the next leg higher will be another strong uptrend.
At the same time, if the market decided to sell off 5% and pullback to their uptrending 50 day moving averages I would consider that a normal response considering the degree of gains we have seen post-Brexit. It is a bit extreme the way we have traded following this major event and it would only be normal for some backing and filling to occur. However, as of now, if a sell off does occur I will be looking at it as a chance to once again buy the dip. As long as Central Banks are working to hold the market up, there is no reason to try and fight it. Go with the trend. It is your friend until it decides to bend. I don’t think we are going to see it bend until this market is either loved by the masses or the Fed starts hiking rates at a much more rapid pace. I don’t see either happening anytime soon.
This market does have some signs of froth showing up but it is overall very minor compared to the antics I have seen in the past. Stocks like ACIA and NVDA have definitely entered climax/parabolic like price pattern structures but outside of those two names I can’t really think of any other leader that looks absolutely ridiculous. In fact, most leaders look like they are just starting what could be potential larger moves. With those leading stocks there are even more leading stocks still forming right sides of solid consolidation patterns that could turn into the next round of leaders. With the kind of technical setups I am seeing in my individual stock scans, along with the ratio of New Highs to New Lows and Advancing stocks to Declining stocks, it is hard to believe that a top is right around the corner.
However, even though I live on a tiny island in the middle of the Pacific Ocean, I still have managed to talk to and receive some investing advice from two individuals that know what I do for a living during the past 36 hours. Both of these individuals had the same advice for me. Sell all of my stocks now before the big crash happens that is right around the corner. This is the same crash I have been hearing about since the rally in 2009 started. I am still waiting. It seems to me that when the SP-600, SP-500, and Nasdaq all hit all-time highs on the same day for the first time since April 21, 1998 and when the SP-500, DJIA, and Nasdaq all hit all-time highs on the same day for the first time since December 31, 1999 that this is the kind of market that you want to make sure you stay invested in.
Yes. The market did top in March 2000 but the gains that were made in individual stocks from Dec 31, 1999 to the top in March were astronomical on a daily basis. It was a very lucrative time for those that knew how to operate in the market correctly. Those that obey their stops and cut their losses and take only the best signals were out of the market and long gone before the real roll over in September 2000 happened. If this uptrend goes parabolic, just like last time, we will participate on the upside, let our stops take us out when the rally is finished, and we will head to the sidelines and/or focus on short positions when the eventual top does happen. However, until it does happen, I am going to continue to stay long this tape and I will continue to take new long signals as they trigger.
Alright everyone. I am going to wrap this long weekend update here. Have an absolute amazing rest of your weekend and I will see you back here or in the chat room on Monday. Feel free to take a free two week trial below and if you have any questions for me feel free to leave them in the comment section. Trade well everyone. Aloha.
TOP CURRENT HOLDINGS – PERCENT GAIN SINCE SIGNAL DATE – SIGNAL DATE
EBIO long – +246% – 5/26/16
GRAM long – +105% – 4/1/16
CLR long – +149% – 2/11/16
SIMO long – +58% – 3/11/16
HBP long – +52% – 3/28/16
ALRM long – +49% – 3/1/16
MIME long – +42% – 7/8/16
EBIX long – +38% – 3/17/16
GGB long – +38% – 7/12/16
AOSL long – +36% – 6/14/16
HNNA long – +35% – 4/14/16
GENC long – +33% – 2/26/16
ABMD long – +32% – 3/29/16
FCPT long – +32% – 2/29/16
SSTK long – +31% – 7/6/16
