If The Market Is Broken... Nifty 9 Must Knows!

Welcome to another trading week!! In appreciation of all of our daily readers of finomgroup.com content, we offer the following excerpts from our Weekly Research Report. Our weekly report is extremely detailed and has proven to help guide investors and traders during all types of market conditions with thoughtful insights and analysis, graphs, studies, and historical data/analogues. 

Research Report Insight #1

The title of this week’s Research Report should also be recognized as a characterization of the last 10-months worth of price action. The conditions of the world economy and financial markets was about as bad as it gets. Nobody anticipated or forecasted the following 10-month period to produce the greatest bull market rebound in history. This reminds me of a book of poems I read from Tupac Shakur back in 2000. Believe it or not, my first job out of college was as a high school English teacher in Miami Dade, Florida. This is one of the worst 10 school districts in all of the United States. Inner-city demographics and high-security risks. I left the teaching profession in short order, but will always remember teaching this book of poetry to my students, which proved common ground when explored.

The title of Tupac’s poetry book is The Rose That Grew From Concrete, and while perceived as “low brow” materials by the punditry, it proved profound for its time, and in my humble opinion for the current day. What I liken the visual to is that which happened to financial markets and the world in 2020. What we’ve seen since is the most unlikely and inconceivable recovery process, akin to a rose growing from beneath the concrete.

One of my favorite poems from Tupac was a seemingly simple play on words:

“When will the world find peace? When the world falls to pieces!”

Research Report Insight #2

The percentage of stocks trading above their 10-DMA has a more material breakdown and call to action. When the percentage of stocks trading above this rapid moving average gets to roughly ~10%, it has historically been a clear “buy signal”. One can be found nibbling above this breadth breakdown level, but a great degree of buying is suggested when it gets to the 10% level, which is highlighted in the chart (circles). Below is the breadth indicator to end the trading week:

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