It is perhaps a sign of the times we find ourselves in that instead of seeking to profit from this rally on the upside, investors are instead choosing to play the "where is top to this rally" game.
Of course, who can blame them really? Psychologically it is much more comforting to trade in the direction of popular perception and narratives that have become mantras to the masses.
"I'm short, underinvested or fully in cash because of a recession, inflation, China, government, food shortages, mass unrest, earnings weakness, Russia, Ukraine, consumer debt...and the list goes on."
This is called a wall of worry.
Markets climb them.
So while everyone is screaming for a market top being imminent, we have the following:
- ARKK is preparing to breakout
- TSLA is approaching $1000, in preparation for some key psychological reconditioning as it retakes the $1000 level and causes some degree of speculative euphoria
- XBI is consolidating beautifully at its 200 day moving average in preparation for a further extension up
- The SPX and Nasdaq are both approaching their 200 day moving average, in what will likely be an overshoot of these levels as investors are still too eager to sell perceived resistance.
The signals are all there.
This market is setting up for an even more significant move forward that will use all of the above mentioned factors as levers to cause all the holdouts, whether bearish or otherwise, to reverse position, grab their shorts (no pun intended) and throw everything they have at the market.
The setup is as clear as day.
The only question remaining is whether you are on the right or wrong side of it.
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