To The Moon

Overstretched rally

The markets have done really well ever since the floor seems to have gone only two weeks back. Ever since then, the rally has been very vertical very characteristic of panic buying as well as short covering.

I mentioned in my earlier article (about three articles back) when I stated that a market rally is overdue based on market sentiments as well as deeply oversold market conditions and technical patterns and now that the rally has manifested, it is time to realise that the market does not go up in a straight line. 

This rally has been too fast and vertical for my liking. It has surpassed the levels that a healthy market usually abides by and overstretched by quite a bit such that it has me scratching my head and going over my charts again and again. 

I might be early in calling for a pullback but I stand by what I have said that the markets are due for a pullback. And it might be just as rapid. 

So to answer the topic, I still believe that the markets are going to pull back in the short term and find a local bottom in late November before surging again into the year end and maybe even early next year. However, I am also preparing for a possibility that the market might meander upwards into late November before pulling back sharply. 

I believe an investor must prepare for all possibilities and risk manage with discipline. As such, considering the macro environment and diverging technicals in different market, I am leaning towards a safety first capital preservation approach. 

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! 😊

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