Markets Can Remain Irrational…

Research is accelerating with the new OVI Spike indicator progressing day by day, yielding our best ever results, and now having a new patent pending attached to it.

There’s an famous saying from John Maynard Keynes that goes: “The markets can remain irrational longer than you can stay solvent”.

Ultimately this translates to: “Even if you are completely correct that an asset is over or under valued, betting against the crowd can bankrupt you before the market finally corrects itself“.

This is why we are rarely contrarian. In fact the WiseTraders ethos is to follow the money.

If we’re going to buck that, it’ll only be for very good reasons, and typically with stocks that are already turning, or have already turned.

This week NVDA will be a big focus for the markets as it reports earnings on Wednesday. It wobbled on Friday, and at $5.8 trillion one does wonder how much growth can realistically be in this powerhouse in the short term.

Market Outlook:

The markets have been technically overbought for a while now, and they will mean revert soon.

The IWM (mid caps) are already wobbling, while the blue chips remain resilient. But that’s how it should be. I expect the lower quality issues to wobble first.

So, during the past few weeks I’ve said it’s ok to go long, but avoid the overbought stuff. Even that was mixed as stocks like AMD went from overbought to ridiculously overbought!

But as you’ll see today, many have started to pull back, sometimes 20% in a couple of days. You don’t want to be caught by those.

And today there are very few bullish setups that fit what I like to see … ie. not overbought!

And there are a couple of decent bears out there that are nothing like oversold.

The big thing today is to secure profits quickly on any new trades that reach their P1s. And if you’re long, I’d tighten your stops to maximise existing unrealised profits.

Our market commentary continues to be outstanding. Mastering market timing enables you to swim WITH the tide at the right time.

Watch the video for more detail.

Market Timers:

• Longer Term Market Timer (OVIsi):
  Half green.

• Medium Term Swing Timer:
  Bullish but pointing down.

• The Main Indices OVIs:
  Blue turning neutral apart from the IWM which is already red.

Stock Selection:

Earnings is pretty much done now, so you can focus almost exclusively on post-earnings setups in either direction.

I looked at hundreds of stocks today to get a feel for the markets, and there’s not a lot out there that fits my playbook.

More than ever, don’t go for overbought stuff!