Market Outlook
After one of the most insane rallies the market has seen in the last 70 years, all the bears could muster was a 2.6% pull back off all time highs. The bears got to cheer for all of 3 days as the S&P pulled back into 730 and has since started to form micro support in that area and ended the week retesting all time highs. Sorry bears.
As much as we would want the market to flag out up here for a few weeks or even months, staying inside a 3% weekly range is going to be hard when Semi stocks are running up double digits on the daily.
To keep things very simple, if we see a push north of 750 in the S&P the show goes on, where the measured move of the current flag would send the S&P towards 770 in the short term.
If for some reason, this is a short term double top, a break below 730 will confirm that the markets sugar high is cooling and its time to take some profits off the table or raise some stops.
The market as a whole feels like a proxy to what the semi's are doing as there price action compared to the overall market has moved almost in lock step. The other difference is the increased percentage gain from the semi's. Yet the daily candles almost line up perfectly.
The semi sector looks strong no doubt, but some of the names inside the sector are showing us a bit of a different story. Nothing to lose much sleep over, but something to keep in the back of our mind.
First up we have NVDA, the Apple of the Semi's.
Now NVDA did go on an impressive 40% run off its recent lows, but has barely made any real progress away from its ATHs and its earning report, one that usually stops the markets in its track was a non-event. With NVDA's large weighting in the market index's, if it continues to fade, it could be something worth keeping an eye on.
Next up we have AMD, who has really woken up over the last few weeks going on a rally for the ages. Shouts to Niko for holding through this entire run up and also congrats to Earick on his 100% gain in ARM (chart still looks amazing).
But traders are losing some confidence at both ends of the spectrum in AMD, seeing dojis at support and doji's at highs are showing us that both sides are confused as what they should be doing at pivotal levels.
Now that I sprinkled in just enough realism to bring our greed levels back to earth. It does seem like the market as a whole is still on the new ATH train. The messages I am getting on social media can be summed up into this question "when is this rally going to stop?" When I ask why does it have to stop, the typical answer is they already sold lower (and want to get back in).
As much as it feels like we are nearing the creast of the rollercoaster, right before the big drop, in reality, there are plenty more chain left underneath the ride to slowly let this ride climb further and further before we reach the top. If I'm wrong, then we know the dip will start once 730 breaks.
Just think for a moment, why can't the market climb higher? What is so outlandish of S&P 8,000? The Dow is at 50,000, Bitcoin went to 100,000+, what is there to be afraid of 8,000? I can still remember the era of the Dow 30 battling to get back above 10,000 in the post 2008 era was a big event and now its now 5 times higher.
The path over the long term will continue to point north, we just don't want to get too close to the koolaid when everyone else is scrambling for a cup without a plan.
From Bennett
Founder Big Picture Trading
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