The Easy Money is Done
By Bennett Tindle January 14th, 2019
The markets are hot… red hot! We are now +40% off the December 2018 lows, and nearly +12% off the September 2018 highs! Although the markets have been challenging following the January 2018 high, Tradinganalysis is proud to have been long throughout the last 12+ months of upside. We will remain bullish until evidence suggests the trend or sentiment has shifted.
Can this parabolic upside momentum continue? Sure. In fact, fund flow evaluations showed a record level of cash on the sidelines during the 2019 recovery… Which means a significant percentage of US investors were either bearish, or simply skeptical of the recovery efforts. Fast forward to the end of 2019, and you will see investors begin to reallocate assets into US equities as they re-deploy capital into the true breakout from the 2018-2019 range. Combine that with favorable earnings and guidance, perhaps continuation of the US/China trade deal, and you have the perfect catalyst for a continued melt higher.
Okay, okay, but the future isn’t written yet, right? Absolutely not. We invest and trade based on the information we have available at our disposal. So, although we remain constructive and can identify a bullish trend in the indices, we must always be cognizant of a possible change in direction. This is exactly why we feel the next few weeks will be instrumental in establishing the tone and direction for the next several months in the market, and why we need to keep a close eye on earnings. Thanks for tuning in, and we’ll see you next week! Be sure to sign up for this week’s show.