Market Update: Testing the Boundaries of the Consolidation Box
December 4, 2023 - Update
The market had a strong move when looking at the equal-weight SP500. We are close to testing the higher level of the consolidation box I have been tracking for months:
The RSP 0.00%↑ has been overperforming the SP500 as more stocks are participating in this rally. The MACD line although is still negative just crossed over the signal line indicating possibly more “upside” ahead.
We might bounce back against the top of the consolidation box or try to break out to the upside. No assumptions. Let’s see.
On the other side, the 10-year treasury yield keeps trending down and is approaching an area where a bounce is possible, see below:
Right now the market is optimistic about the battle against inflation. This might change soon. It has not changed yet.
What about oil prices? The Brent price has been trending lower too. A good sign for inflation.
All in all, despite the many bears shouting about the upcoming recession, the market keeps grinding higher and unless we start seeing very bad economic data (jobless claims, industrial activity, consumption, etc.), the market can keep moving higher.
What is my thinking? I see M2 contracting (not at a fast pace) which will slow down economic activity. To what extent? Nobody knows. So bad economic data might drive a sell-off. We haven’t seen it yet. Inflation is under control until proven otherwise. Can the FED get in control of inflation, start decreasing rates again an avoid a major recession? Nobody knows. So, better to be prepared to all scenarios.
PORTFOLIOS
10X LARGE CAP MOMENTUM POT
Both PDD 0.00%↑ and DKNG 0.00%↑ are performing well. I raised my stop loss as shown below.
10X SMALL CAP MOMENTUM POT
Here ML 0.00%↑ has been super-performing, with my first position above 100% in 2 months. Also STNE 0.00%↑ is performing well. I raised my stop loss as shown below.
This is it for the week. Not doing anything else. Here is what I am watching: CROX 0.00%↑ ASND 0.00%↑ CXM 0.00%↑ SYM 0.00%↑ SOFI 0.00%↑ LYFT 0.00%↑
In case I decide to start a new position, I’ll post it here.
Have a great week!
g.
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Important: This is not investment advice. Consult a licensed financial advisor before making any investment decision.