Earnings season is underway and has NOT been spectacular so far which has caused this market to go choppy in a wide range forming a megaphone type pattern. Also Ukraine situation is adding more fuel to this choppiness along with seasonal weakness in the month of May. What shall we expect in near term? BPNYA remains below 70 mark and NO BUY signal is generated as BPNYA did not cross EMA(30) yet. Volatility ($VIX) continues to remain at lower levels but has potential to change quickly, hence be cautious. NYSE daily chart below displays current choppiness, yet market has managed to remain near HIGH. Divergence is very visible as every week passes by and at some point in future we shall get a corrective action. NYUD is however portraying a different picture. It continues to rise relentlessly but at this point the distance between NYUD and EMA(21) is increasing. Think of this like a rubber band, higher the distance between these two, it will materialize into faster snap back. Looking at all the charts, it appears as if market is painting a false picture of all is good and trying to make a NEW HIGH. However, we might get a significant drop in coming weeks and it will be very choppy which will cultivate into a painful correction. Does it mean a BEAR market will start? We do not believe so, this will be the major warning shot before the actual BEAR market to follow later this year or early next year. Lets cross that bridge when we get there.
What does it mean for our Investments?
Market gets benefit of doubt on BULL side however be cautious... Comments are closed.
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