This chart was drawn up before that 3650 recent bottom and bounce on the SPX, but the general idea is how the market is likely to move. we are currently following wave 3 and will reach a certain resistance point. it might even cross 4000 and beyond. what might even possibly happen as a scenario is that the market continues to plough upwards further as there is net equity inflows coming in. the real deal comes in if the Fed continues to hike into a recession, then the collapse will be real. right now with so many people being bearish, to take on a bearish view is simply being an echo chamber and will likely set you up to be slaughtered if this is a mid wave rally.
bear markets don't go down in straight lines. if you have shorts opened, be very very careful at this juncture. many retail investors have sold out at the bottom. and net inflows are coming from funds- 401k, hedge funds, etc. there are of course dip buyers still. and hence a rally is likely to ensue.
if there is to be any melt up to happen, the market must not have any further bad news in sight. given the war situation and lots of uncertainties, I would not bet on the market going up straight and instead, be cautiously optimistic for short term. one can never be certain of the gyration. at this stage, US growth tech is very hated and I've identified and locked into the emerging leaders. I sold $UPST not because of they were not performing or the plunge in stock price. I sold simply because they put loans on their balance sheet. this is big no no to me. I can certainly get in back at any time if management does a U turn on their decision. small issue. risk and position sizing is important so that the overall portfolio is protected. it is ok to be wrong but don't let the wrong be big enough to kill you and don't stay being wrong.
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