It feels and looks like stocks are going to start riding a momentum wave although trading volume is probably going to be light as summer vacations are wrapping up in the next two weeks.
As mentioned on Thursday night’s report is that the market is ignoring bad news right now and this is something to monitor if and when investors are hyper-focused on good or bad economic news.
The comments in recent weeks of that describe the market looking for “green shoots” (referring to a new plant growing out of the ground) of potential signs of economic recovery has now matured past that point.
Investors seem to be convinced that the worst is behind us after so much brainwashing by government officials, politicians and some early forecasters trying to make a name for themselves by making a famous call.
The important thing to watch is if the market acts like it is believing those talking points and right now it does. Any selling that occurs in coming weeks will probably be the type of correction that investors will buy into and that will give us another excellent swing trade opportunity on the long side.
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The market is resilient and the buy on the dip mentality is still alive and well. The same pattern has continued for weeks of buying on dips as well as investors focusing on economic data that may give clues the economy is turning around.
We are starting to see headlines in business news stating that a certain economist stating the recession bottom may have passed. Along with the rosy picture the White house and other politicians are painting about the economy, the fact is the rebound from such problems as the USA (along with most countries) has had is likely to quite some time to return to a healthy state.
Is real estate going to be profitable soon– not likely. Can we make money in stocks? Very likely.
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We are getting economic data that is well received and this should fuel the market rise from here. Any little pullback will likely be met with “buy on the dip” which creates shallow dips and higher highs after that (assuming no negative world news occurs).
The sentiment is likely to be very bullish with this kind of economic data coming out and the thinking that will prevail is to ignore that the numbers are still awful but the focus is on that it is improving and the extremely bad news is not in the cards.
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