Hi, Bob! And a Happy New Year to you and family.
Yeah, I think he’s a little casual about calling it intermediate term. Maybe short, or short to intermediate - would be more appropriate.
I think the real issue is whether such long winning streaks are signs of strength - or, are they blowoffs? I think, there is a little of each. It looks like a little sooner - or later - most of the time they were followed by significant corrections.
Another takeaway, imo, is that those streaks are NOT short term sell signals.
That said, it does appear that the markets are 1) very overbought, 2) show bearish momentum divergences on weekly and monthly charts, and 3) shorter term, have traced out a “possibly” completed 5-waver.
The longer term momo divergences suggest a more extensive correction, at some point. But, sometimes the market waits until more such divergences accumulate. So, it may take a while, or - it may not.
My house rule - if not convinced, fall back to trend following. Sometimes, I think that even if convinced, it’s still the best idea. Something simple, easy to monitor, backtested… makes life easy :) |
