In last months article I wrote
"I believe the evidence is strong for a major market bottom to be eminent."Well, we got a very nice bottom days after my article was published and we are now significantly higher, as shown by these graphs of the S&P500 and Wilshire 5000 indexes.
Remember, predictions using technical analysis such as mine for last month are cool when they are correct, but they often turn out wrong. The goal is to be right more often than wrong so you make money over the long run with your predictions. You should only use a small amount of your "explore" portfolio based on these predictions, so if you are wrong your portfolio doesn't suffer a great deal.
Where do we go from here?
I don't profess to time the market with any great accuracy. Most, if not all, pundits know that they can't time the market repeatedly over and over, but they still love to give predictions anyway. I am no exception!
I believe fundamentals are a strong tailwind to push the market higher. We seem to be entering a global recovery, especially in the technology stocks, as shown by the technology sector exchange traded fund, XLK:
Add in how RSI have moved from over sold at 0.30 to neutral, and I believe there is plenty of room to go higher.
The market has been worried about an eminent Federal Reserve rate hike, but they have said they will only do this after it is clear the economy is healthy and creating jobs. The first rate hike should be taken as great news, not something to fear.
Investor Sentiment
Site hits have increased significantly in the past weeks. I have a hunch more people are getting comfortable with the market and more money is coming in. Our site hits are somewhat an indicator of this.
Requests for a free sample of my newsletter are another indicator that seems to lag and be somewhat a contrarian indicator. When the technology stocks were peaking earlier in the year, I was getting about three times the daily requests that I get now. I am getting some past subscribers who bailed for one reason or another on the market during the bear who are now subscribing again, perhaps due to the correction from the tops in tech stocks which has given better entry points for some of my stocks?
Due to profit taking and buying dips, I've been about even for the year with a few points of noise one way or the other, as we seem to have a bull market rotation. Clearly, the tech stocks have had a nice test of the 200 DMA (Day Moving Average) and have completed a correction back to a major round number support level at $20. It looks like they have once again busted above the 50 DMA with plenty of RSI tailwind to push them higher!
