Every one is expecting a pullback and yet market continues to make NEW HIGHs. Nothing seems to STOP this market from marching higher. What happened to "Sell in May and Go Away"? Where are summer doldrums everyone was talking about back in early May! What should we expect in coming weeks ahead? BPNYA back above 70 mark suggesting this is NOT the time to open new positions, rather its time to be cautious. Volatility ($VIX) is as record low levels which in turn has allowed this market to continue its rally achieving NEW HIGHs. However, historically when volatility has reached such low levels, the outcome was NOT good in every instance. ONLY time will tell if it is any different this time. NYSE daily chart shows market making NEW HIGHs and crossed the upper trend line. Divergence seen earlier between Price and RSI is nullified as RSI made new high as well. However MACD does show divergence over last 3 months. Not much has changed on weekly NYSE chart, divergence between Price and RSI, MACD remains in place for now. NYUD is painting a very bullish picture, however the farther NYUD gets stretched away from EMA(21) suggest we shall see a pullback soon. Market often has a tendency to do exact opposite of what everyone is expecting, hence when everyone was expecting correction it made NEW HIGHs. Many people would have missed this rally and would try to get in at any cost to avoid missing further rally. Once everyone is on-board (or shall we say ALL IN), precisely at that moment market decides to take the turn. Volatility at very low level suggests complacency and that is indeed the moment we should pay attention and be cautious. The decline is always a surprise and takes everyone off-guarded.
What does it mean for our Investments?
Market remains in strong bullish bias for now... Comments are closed.
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