A Perfect Week of Gains Sets the Stage for Further Upside
After going from oversold to overbought very fast, here's what would be a great market setup for another leg higher.
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The bulls were four for four during Thanksgiving week as they wrapped up another day of gains during the half-day session on Friday. The action slowed slightly on a low-volume day, but 58% of stocks advanced, and the Nasdaq 100 (QQQ) led with a gain of 0.8%.
There was some minor profit-taking in the last 30 minutes of trading, but a closing spike pushed the indexes to a day-high close. Recent buyers were sticking with the strong trending action. Cyber Monday has a tendency for some profit-taking, but with growing confidence for a Fed rate cut and some good old-fashioned end-of-the-year seasonality, there weren’t any big worries about a major reversal.
The strength this week did a nice job of fixing some broken charts. However, we went from oversold to overbought very fast, and now we could use a little consolidation. A pullback to the 50-day simple moving average would be a great setup for another leg higher.
Smaller stocks have been recent leaders, which bodes well for stock pickers who can find stocks with good fundamentals and charts. I expect to be very aggressive over the next couple of weeks as FOMO builds, bears are squeezed, and end-of-year positioning intensifies.
Have a great weekend (Go Wolverines!). I’ll see you on Monday.
At the time of publication, Rev Shark had no positions in any securities mentioned.
