After the market broke below its 50-day two weeks ago, I discussed being defensive until market conditions improved. Since that Friday, April 19th low, the major indexes rallied back to their 50-day moving averages and failed so far this week. This is just a reminder to be patient until the market proves itself better. I would still like to see a follow through day and see the market get back above its 50-day. Not to be overly dramatic, but I think Fed Chair Powell’s comments today will dictate that direction. In other words, if his tone is dovish, we could see the market firm up and resume its uptrend soon. If his tone is hawkish, then the April 19th low is likely to be taken out to the downside.
Rather than guess, I prefer to let the market prove itself first. As always, know your timeframe. If you are longer-term and these shorter-term movements don’t affect your strategy, then it doesn’t really matter to you. If you have a shorter-term timeframe, then smaller positions and remaining defensive would be prudent. The good news is that there are plenty of stocks acting well and/or still above key moving averages. Examples that have been mentioned in recent videos include DELL, GOOGL, VRT, TMDX, AVAV, LDOS, VKTX, and many of the restaurant stocks. The key right now is to be patient and disciplined until we get a clearer direction. I will discuss this further in tonight’s video.