Being overly bearish is bad for your health, so please take the this week’s game plan with a pinch of salt. Overall we are becoming more and more concerned with what we think is irrational exuberance in the market. We look at some of our concerns and identify some trading opportunities for the week ahead. We also have a look at some requested charts.
So, in the depths of the COVID gloom there was talk of a depression and stocks dropping another 50% from the lows. There was absolute conviction that you should not be buying. Now, after one of the most insane V-shaped recoveries we have ever seen, most analysts tell you to buy Apple, Tesla and anything tech-related as we have entered a new type of world. And yes, a V-shaped recovery… as most analysts say it isn’t happening, but it’s a clear V – as you see in the chart of the Nasdaq. Anyway, the consensus has swung from “don’t buy” when it was low to “buy everything” here and now? We disagree. We think it’s time to go risk-off.
The Index holding the largest amount of fast money shows that we are still above the famous 20 day moving average. It has now been tested numerous times, as well as, the upward sloping trendline that mirrors the 20 day.
We update our comments on the Nasdaq from earlier this week. We note that there are a few trends that look in danger of being broken.
Markets remain in a tricky situation. The strongest market currently, the Nasdaq, is the one that we are watching. If the QQQ ETF breaks $250, it’s our triple kill zone.
Our Thoughts on US markets and the Gold market – 24 April 2020.