Market Update

Uncategorized May 09, 2022

Another week has gone by and that's another week that we are soooo glad we are on the sidelines. We exited this market back on April 18th. Since then, Nasdaq has lost 1,699 points or 13% of its value.

At the beginning of last week there was hope. Monday had given us hope. After a terrible week prior, Monday saw the S&P 500 up .6% and the Nasdaq up 1.6%. Maybe we were finally into a convincing rally.

Tuesday and Wednesday fueled that hope. Small gains Tuesday followed by big gains on Wednesday. We hadn't undercut our low of Friday April 29th so the rally was still alive. All we needed was a final follow-through day advance on higher volume and we'd have a Green market once again.

But our hope was short-lived. Since Wednesday we've seen three days of big declines and we undercut our prior low on both Friday and Monday (today). So we are back to square one - looking for a convincing rally that will signal a re-entry point for this market.

For the benefit of the new members, here's what we'll need to see before we will re-invest:

  • rallies in both the Nasdaq and S&P 500.
  • these rallies will need to be upward in direction and NOT undercut the previous lows established today.
  • these rallies must be at least three days in length, preferably four or more.
  • these rallies must culminate in a big day of institutional buying - also known as a "follow through day". This day must see our two indexes advance at least 1.25% on volume that exceeds the prior day.
  • Once we get our big institutional buying day, we'll see the markets reclassified to Green - Confirmed Uptrend. At this point it will be safe to return and we will issue a new portfolio with buy-in instructions.

And so we wait. Remember, this correction is a blessing in disguise for us. We will be able to re-enter the market at more reasonable prices while others have suffered big losses. Its all good!

As always, please contact me with any and all questions.

Duncan Campbell

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