AI Deals and Serial Top-Callers Are Driving Markets to Series of All-Time Highs
The price action is overwhelming all the negative arguments right now. Here's what your main goal should be.
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A series of significant deals in the AI sector is helping to fuel the indexes to a series of new all-time highs. On Thursday night, Japanese companies Hitachi and Fujitsu announced deals with OpenAI and Nvidia (NVDA) , which is helping to push the Nasdaq 100 (QQQ) up for the sixth straight day.
The good news in the AI sector is helping to crush bears and shorts who expected the government shutdown to be a catalyst for corrective action. Once again, the serial top callers were trapped and helped to fuel short-squeeze action, and created some powerful FOMO.
An additional factor is that the September employment report will be delayed due to the government shutdown. This would have been the last monthly jobs report before the Fed’s October policy decision, so now there will be no additional federal data. That is impacting the likelihood of a quarter-point cut at the next meeting, so far, but it will create some uncertainty about how strong or weak the economy really is.
What is most important right now is to understand that price action is overwhelming all of the negative arguments. The bears may have very reasonable and logical arguments to explain why this action is not justified and won’t last, but there is no way to time an exact market top with any degree of precision.
My best advice is to stay with the momentum as long as possible. It may be a good idea to take some partial profits into strength as technical conditions become even more extended, but a better way to time this action is to wait for weakness and use tight stops to take you out. The primary goal should not be to sell the exact top but to exit when positive momentum is reversing.
This is an excellent market for riding the strong momentum, but it is a challenging market for making new purchases. Stay selective and don’t let FOMO push you to make poor entries.
At the time of publication, Rev Shark was long NVDA.
