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Short-term Cautious

As I have mentioned for the last year or two, I still think the Nasdaq Composite eventually gets to its old March 2000 high of around 5100-5200. It will probably get there over the next 6-18 months, however, it will not be an easy ride up. There will be pullbacks, shakeouts, and quick corrections along the way to keep the Bulls honest.

Although I am bullish over the longer-term, in my Weekend Video I outline the reasons I am cautious over the short-term:

1) I am finding very few quality stock setups.

2) There is excessive bullish sentiment, as seen in the NAAIM and Investors Intelligence data.

3) There are a high number of recent distribution days in the Nasdaq Composite. Also, the market’s leading index (the Nasdaq 100) $QQQ and the market’s leading stock $AAPL both closed below their 10-week moving averages.

4) On the positive side, the Biotech sector $IBB continues to show the most resilience and is an area I still have decent exposure to.

Over the past 2 years, there has been nothing wrong with being cautious at times and locking in some profits. However, STAYING bearish for too long has certainly NOT paid off. We’re in a liquidity driven market fueled by a globally coordinated effort to keep rates low and the markets high. Again, I’m not turning bearish. I simply think the market might see some increased volatility over the near-term to shakeout some of the recent excess bullishness. Good luck trading!

I can be reached at: jfahmy@zorcapital.com.

Follow me on Twitter @jfahmy
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By |2016-11-26T07:10:49+00:00January 4th, 2015|Tags: , , , , , |

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