Market registered strong increases due to expectations of overcoming the pandemic
After the last autumnal correction, and US elections, a market is already being “full”, that is, it is no longer the large megacapitalizations that are helping the new highs in equities, but it is already the whole market, in all its breadth.
It is what is known, as a healthy rise, breathable rise, etc etc, what we are seeing, was a possibility that in past articles comment, and that it could happen with a lot of possibility, and it is really being similar to post elections of 2016.
I have seen this situation many times, the American market repeats many patterns, when there are difficulties, it hits the great megacapitalization, and when the market recovers its breath, they start to throw the rest.
This situation has occurred in other times, not only because of the COVID issue, especially in the beginning of the amplitude, then it usually happens that both markets pull at the same time, until moments of doubt arrive, and the great megacapitalization begins to lead the movement.
AMPLITUDE, is a concept that refers to the fact that the majority of the market is rising, and not just a minority of large capitalizations.
I want to comment that geographically, the same thing has happened, I was already talking in July that China hit first, later Asian indices are following, such as Japan, but India, New Zealand, Australia, and other markets are also following, (all this already was commented on in articles) in which he showed vigilance, because really the zones, and structures of some index (decades), are quite important
The data of breadth, depth or bre adth help us to assess the health or strength of the market as a whole. They are indicators that are built on many values at the same time, number and volume of values that rise or fall, the best known are the Advances-Decreases line and the McClellan , Oscillator and Summation, most used for the medium term.
The McClellan Summation Index or Summation Index is based on the work of Sherman and Marian McClellan. It’s a long-term look at the momentum of an index’s underlying amplitude, when it has recovered from -1000 or below +1000 or above , as it has now, it has warned of a sustained recovery.
The curiosity in Weekly, is that two movements have been completed (-1000 +1000 (in a short space of time, the falls of 2018/2020, which could be interpreted by a long-term bullish exit.
Currently, and waiting for the weekly close, a server appreciates bullish momentum, which is really, what is already happening in NYSE / RUSSELL 2000 ETC ETC, in turn at the top we see the SP500, we are already in a typical structure, recovery in V, and currently coming out of a Darvas box, ( exit from a corrective flat pattern (September / October lows). The target that I appreciate at SP500 is 4400/4500.
Be careful, I speak as a technician, I am getting wet, this scenario, for a server, is interpretable as a large-scale bullish output, compatible with small corrections, (that will always happen) but it is highly unlikely to see deep corrections, after a double oscillation + 1000 / -1000, refers me to attending a correction like December 2018 or March 2020, in the stock market there is nothing at 100%, but if I would say that at 90% it will not happen.
Key moments in CRUDE WTI key resistance 43.50, (in December producers’ meeting) and COPPER, very important resistance in the surroundings of 3.30 dollars, for the rest, these are the sectors in recent times, industrial metals are showing, steel, copper Aluminum, all this means that traditional sectors such as energy, basic materials, industrial are pushing more than technology, curiously discretionary consumption, continues to push more than basic consumption.
At the level of sub-industries, some internet retail, games, gold, silver, copper have already been strong, aluminum, hotels, airlines, real estate, heavy machinery, real estate, construction, curiously renewable energy, and solar (the latter is the TOP1 sub-industry in 2020 in the USA) In Spain they are already seeing it, the Solaria, Solarpark, Grenergy, Gamesa, and the electricity or construction companies, all want to be renewable hahaha (the Acciona, Naturgy, IBERDROLA, and REPSOL itself, all RENEWABLE want to label, that attracts capita l is.
Anyway, my interpretation is the following:
The market is already hitting with everything, but sectors now in the rear, will come back, and this new bullish hit will happen at the same time, but there will be times, in which megacapitalizations related to the NASDAQ 100 / INTERNET will rise strongly, then, they will continue to bill more, (with 4Q and 1Q of records) and at the same time, with the hope of bovine recovery, weaker markets will gradually attract capital.
All this, logically compatible with corrections, which I do not think are very deep, because the bullish exit situation is already drawn,
I still hear a lot of noise, election fraud, that if the aid is not going to be approved, etc., it is the same noise as always. When is there no noise in the market?
At this time, any correction would be a blessing, because the market is already breaking structures, not only in certain geographical areas, but in specific sectors.
Will 2021 be like 2014 / or 2017?
Of course I am not a fortune teller, but both from the sentimental aspect, the psychological aspect, 2020 has done a lot of damage, just 15 months before, 2018 presented another scare of three pairs.
At a technical level, if I am in a position to affirm that the parameters are adequate to draw such a circumstance, that is, to be 2021 as 2014 or 2017.
Does it mean to get bought full 100%? no, we have 29 corrections in the current bull market, perhaps the harsh 15/25% we will NOT see again in a while, or there is little statistical probability, but even so, in bull markets, there are many other corrections, 5/10 %, which can also harm
You must always take care of risk management, even in bull markets.
Diversification of assets, liquidity for occasions etc. etc.