In yet another show of conflicting signals within the markets, some stocks keep soaring whilst others seem to struggle. Call them divergences, market leaders or market laggards depending on what you are looking at or whatever names you want to call them. But one thing that stands out is that this market is not reflective of one in the early throes of a bull market.
Despite what the market headlines are saying with regards to soft landing etc, noise will be noise. But price actions always seem to pick up on the truth and reality. Because despite the attempts by the smart money to move behind the scenes using dark pools and off market transactions to avoid detection, when you know where to look, you know when to be cautious.
The markets are too divergent in my opinion. Small caps and mid caps are in bearish technical patterns as are equal weights when compared to the normal indices. Transports and financials are already in patterns reflective of a recession. The economic data might be chugging along but the last shoes to drop in a recession are usually employment numbers and they do not do so in a linear fashion. Think a cliff. You keep going up and everyone feels safe until the ground disappears. There are no warning signs. When everyone scrambles for the exit, they just rush.
I am just stating what I feel. I believe the markets are still poised to rally into the year end but also believe there will be a retreat into the month end before that materialise. The broad market index and Nasdaq looks to be in an extended fifth wave running on fumes so I am expecting a pullback in the short term before the market picks up again to rally into the year end provided the supports hold.
I might have digressed a bit but I thought it was important to say all that. Microsoft seems to be completing the fifth wave up and fifth waves can be hard to figure out. So I have divested my Microsoft holdings to realise gains and protect capital as well as waiting for a better entry point. They have a great AI story ahead but the macro picture needs to be navigated and risks managed appropriately.
Disclaimer: Please kindly do your own due diligence as this is a sharing article and in no means financial advise. I am just sharing my opinions and thoughts.
Thanks for reading my commentary. Hope it helps!
Stay safe! 😊
$Semiconductor Bull 3X Shares(SOXL)$
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Sounds like you made a wise move. Microsoft's AI story is compelling, but one needs to tread carefully and wait for the right opportunity to pounce.
Never buy any stock at all time high. It’s will drop as AI hype dissipates into reality.
Indeed, with macroeconomics being so unpredictable, it's always better to err on the side of caution.
Everyone knows AI is the future, but navigating the volatilities wisely is indeed a matter of acumen.
Yeah, I can sense the uncertainty around Microsoft's fifth wave. It was smart to reduce your position