There is so much uncertainty roiling the markets these days, whether it’s from the news cycle or crazy tweet storms. As a result, the indices are chopping around a very wide range (mostly the SPX 500) and there is a lot of market noise as to how this will play out. If you end up listening, you could miss trade opportunities.
Why you need to turn off the market noise
One: We are not in a bear market.
Two: Though the yield curve is flattening, it is not a negative situation.
Three: The R2K and Nasdaq are closing in on another set of new all-time highs. Money flows have been solid, and while there was a momentary pause just before the holiday, we saw some impressive action late last week that has now tilted the advantage to the bulls (for the time being). Breadth has been quite impressive the last few days, and some newer leadership has finally started to emerge from the healthcare and biotech sectors.
Problems can arise depending on what or who you listen to (if anyone at all). I have been adamant over the years in suggesting you pay attention to market action and ignore the market noise. Some pundits may provide decent arguments (mostly from a fundamental point of view), but feel free to tune out their fair value estimates, price ranges based on valuation or predictions based on where the markets are headed. These predictions should in no way determine your course of action.
Remember: The charts and technicals will provide unbiased information on how to proceed.
As we enter a new earnings season, stay on your toes. The financial sector has been week lately, but we might see some of those names make a return. As a friend once asked me, ‘Do you really want to be short during earnings season?”
