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Markets are providing a rare opportunity
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Loading...A permanent topic in the financial media is that this bullish market may end very soon. It’s not going to continue straight up and we’ll experience plenty of corrections along the way.
It is not known whether this will happen after three months or three years, but rather towards the latter because it will take a long time for investors to change their mentality.
Weekly volume is important to monitor because the big funds control the market. The major indexes continue to show that institutions are accumulating stock. For the most part, they are buying stock on the positive weeks and selling very little on the down weeks. This isn’t limited to the US markets. The global boom is being confirmed by new highs in many international markets. In the US, the leading growth index is the Nasdaq 100 and you can see in the chart below that it JUST broke out in July 2016 after going nowhere for almost 17 years!
The biggest argument of the bears is that the market is overvalued. But if we take out the energy sector, the market is actually cheap. Over the next two years, economic incentives from the new administration will help raise incomes and justify valuations.
The market sentiments are mixed. Биковете са нервни и са с единия крак навън. Even the Bulls I speak to are nervous and have one foot out the door. This constant fear is helping to drive the market higher, as many people are underestimating the power of psychology in fueling market rallies.
Despite everything that has happened over the past few years - geopolitical concerns, dramatic elections, viruses, Brexit, terrorist attacks, etc - the market has been incredibly resilient and literally brushes off any bad news.
The media hates Trump and will never say anything positive about him, but imagine if his team actually makes progress in tax reform, health care and the overall economy improves. This could move GDP growth from around 1% to 3% and S&P earnings can increase to $140-$150 over the next two years. Again, no one wants to consider anything positive but remember two things are almost always true: 1) The world keeps getting better and 2) The people always think it’s getting worse.
Source: Yahoo Finance
Junior Trader Ivan Ivanov
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