Correction For Some, But Not For All Indices: Weekly Nifty 9

The following excerpts come from within Finom Group's weekly Research Report (for who I am employed). The reports are very detailed and aim to deliver a broad macro-market outlook to members. Thank you for joining us this week for a snapshot of our overall analysis, as follows:

Research Report Excerpt #1

At the industry level, since the end of March, here is what the healthy rotation has looked like:

If there has been a lesson the market has aimed to teach and inform newer investors since the election period last year it is that rotations are the sign of a healthy bull market. The underperformance in Growth/Tech vs. Value/Cyclicals is still in place, but the gap in performance has been reduced over the last 3 weeks. For all the noise that developed around Growth/Tech since the onset of the New Year, it has proved to be just that, noise. This is yet another lesson the market has taught us since the March 2020 period and no better outlined than in the following graphic in my opinion:

Research Report Excerpt #2

Going all the way back to 1988, investing at all-time highs has proven a better day to allocate capital than any other day (Review #2).

If it seems counterintuitive I get it, because the financial and social media noise is always promoting the idea of a market pullback post-all-time highs. So the question becomes why not wait for a pullback to allocate capital? The data is the data though folks, it’s fact-based, and if you want to argue with the data… I could think of a million better battles to choose from. But speaking of all-time highs and pullbacks, let’s definitely get straight to the charts and studies.

Research Report Excerpt #3

To review, I am anticipating more new highs for the S&P 500 in 2021. Finom Group’s price target of 4,325 is consistent with our earnings and macro-outlook, as well as the historic data we’ve compiled and analyzed to this point in the New Year. All the breadth indicators and/or technical analysis offered above suggests the 9.92% YTD gain has executed in a healthy fashion and with healthy rotations from large-cap to small and mid-cap, and lately even reversing that trend. (small, mid, micro-cap relative to large-cap/SPX chart below).

While investors may not appreciate my near-term outlook for the markets, I will always suggest that any near-term weakness should prove a long-term opportunity. The market teaches us this truism and it’s up to each investor to rationalize both uptrends and bouts of consolidation as win-win scenarios. That’s how I fashion my trader psychology or approach to each trading week, manage the Golden Capital Portfolio such that each week is a win-win; up or down is an opportunity to either lock in profits and rebalance or buy the dip.

Moreover, what’s noted above relates to the S&P 500. What about the Nasdaq; what about small caps (Russell 2000)? I’ll definitely wrap up this week’s Research Report with commentary and analysis concerning those markets/indices, so if you wish to jump ahead…

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