Don't Laugh, 'Ridiculous' Markets Can Last Longer Than You Think

Don't Laugh, 'Ridiculous' Markets Can Last Longer Than You Think

The week following the Fourth of July holiday has a tendency toward negative action. In addition, the news flow about the spread of Covid-19 has been terrible and various sectors of the market are grossly overbought. So what do did the indices do this week? They went higher. The action was a bit more mixed but early weakness on Wednesday, Thursday and Friday was bought and rotational action out of technology names on Friday failed to do any real damage to the FAANG names and other big-caps. The logical expectation for this market was that it needed some rest after the run it's had but that's just not happening. Shorts were run over, speculative traders continued to feast and FAANG momentum cannot be justified on any fundamental metric. I commented at the close last week about how the speculative trading is the closest we have seen to the bubble days back in 2000, but that that kind of action can last much longer than seems reasonable. That point seems to have been proven correct this week. There is little for prudent market players to do but to stay with the trend even if it feels downright ridiculous. Make sure you take a look at my weekend post "With the Right Strategies and Thinking, You can Rack Up Big Gains in a Market that Others May Fear." Aggressive trading is not inconsistent with a cautious market approach. This is definitely a highly unusual market and will continue to be extremely challenging. The good news ...
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