Correction time for the Market?

April 21th, 2024 - Update

Well, it looks like the market has decided to go into a correction. Starting from the NASDAQ weekly chart:

The index has lost about 7.6% from its peak and although volume was not high, the weekly MACD crossed over signaling a momentum change. The 40-week moving average is about a further 4% below current levels and that should be an area of support.

My gauge indicator to assess market conditions on the daily chart looks like this right now:

And here is the trend:

The indicator deteriorated very quickly this past week. I want to see some reversal action before doing anything with my money.

My Take:

• The market needed a break: inflation concerns and the geo-political backdrop offered the right moment for such a correction

• I expect the market to stay volatile for some more weeks unless we see clear signs of inflation getting back under control (a 10-year treasury yield turning down would confirm such a scenario)

• Valuations are fair to high, especially in the tech sector;

• The economy is strong, and credit conditions are not critical, so I don’t see the need for a prolonged correction

• I see the market on a mid-term uptrend, it just needs to get more confident that inflation is not going out of control: for that oil prices and geo-political tensions can be decisive

• The path of less resistance is down or sideways in the very short-term

• The AI theme will remain strong despite any economic scenario
  

PORTFOLIOS

Below are my Momentum Portfolios. I was stopped from $DKNG. I updated my Stop Loss levels as shown below. I am doing nothing else this week.

10X LARGE CAPS MOMENTUM POT

10X SMALL CAPS MOMENTUM POT

SECTORS

Below is a table of equal-weight sector indexes:

Now defensive sectors are at the top part of the table and Financials are taking the lead, maybe driven by higher interest rates expectations in the short term.

Lastly, here is a look at a broader selection of ETFs:

Airlines are doing very well, also Gold. Semiconductors had a very bad week.

That’s all for the week. I want to stay patient.

Let’s see how the market unfolds.

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Important: This is not investment advice. Consult a licensed financial advisor before making any investment decision.