Shorter-Term Trends And Longer-Term Outlook For Saturday, Oct. 26


A similar rally is taking place for the German DAX. This chart has the look of an inverted head-and-shoulders. Bullish.
 

Here is a chart of the US market and it looks very good to me. The two most important indexes are leading stocks into new highs after a scary whipsaw break down in September. Bullish.

Semiconductors are leading the way higher per usual. This chart looks so good.

Momentum stocks (growth stocks) are still lagging, but they really don't look that bad if you go by this MTUM ETF shown below. 

When the growth stocks turned lower in September my outlook on the market went from negative to very negative. How could I possibly be optimistic about stocks if all the stocks in my accounts were heading lower?

However, I have lost enough money based on my emotions to teach me not to follow my emotions. So I followed my trading plan and trimmed and pruned the former leaders and moved money into the current leaders, and now I am back in sync with the market, I hope.

Everyone was calling it a rotation into value. My pessimistic view was that the economy was teetering on the edge and money managers were getting out of the way by moving into stocks that would not go down in price by as much as growth stocks. 

But it could also have been that the economy was bottoming out and finally starting to benefit by lower rates and the increase in the money supply. Somehow, money managers with their magic powers were able to sniff out this turn in the economy, and so they moved into the stocks that were going to benefit the most from economic growth... the value stocks.

But who cares. We aren't here to be right, we are here to make money. So I am currently holding the stocks that are hitting new highs, but I also have my eye on my favorite former leaders because if the economy is going to start growing again then the former leaders are going to have a comeback.

I don't usually mention individual stocks because I don't have any special insight into companies. I just know what I read online and that is available to everyone. 

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Disclaimer: I am not a registered investment advisor. My comments above reflect my view of the market, and what I am doing with my accounts. The analysis is not a recommendation to buy, ...

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