Miguel Ferreir (WizDayTrader)
Apr 3, 20232 min
The second thing a bull market needs
Today we are going to take a look at how a new bull market in stocks cannot happen without the participation of this second group.
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Are you a professional investor looking to make the most of the next bull market?
You're not alone!
A bull market can bring huge gains to investors who get it right. But, what is the one thing that must happen before a new bull market can truly begin??
The answer may surprise you.
There are many factors that must come together to create the perfect conditions for a bull market. But, there is second key factor that is the essential ingredient that must be present before a bull market can really take off.
We'll show you how you can use this second key factor to your advantage in the coming bull market. And right now the message is clear, we are not in a new bull market yet!
BANKS and Semiconductor need to go higher together!
In all major recessions that we have had, Banks peak first and then we get a sector rotation from other parts of the market. Not the other way around!
Now if we get Semis to participate to the downside from here we might see a second leg down for this bear market.
Except maybe for COVID, a rare exception to the rule, the market does not simultaneously move lower together. Weird, right?!
Actually, not at all!
We call this phenomena distribution -> when the shares of a company are being sold, on net, in the market (and is the opposite of accumulation stock).
The semis are seeing weakness today and we want to see if this continues. This just as technology, which makes up 25% of the sector weighting in the $SPX, is hitting overbought levels short term on the daily chart (around 70). We currently have a short on 4VLN, this stock is down 26% from our sell rating and we are crushing it.
Three Semis we noted short are Micron, $MU; Direxion Semiconductor Bull 3x Shares, $SOXL, and $AMBA, Ambarella Inc., are looking to be in trouble. $SOXL not being able to break over $18 is bad sign, we like it short below those highs.
If $AMBA is unable to maintain momentum it could break below it's 200 SMA putting further pressure on it's stock. Short below $77.57, target $68 short term.
$MU we noted weakness this am as it could not break above $64.40. A test of it's 200 SMA at $57.3 is likely.
Be sure to give us a follow if you haven't and inform yourself if why the market has been saying risk off to us for some time now in certain sectors and why we have been getting short in those.
We appreciate everyone that takes the time to read our blog posts and don't forget to trade confidently!
Essex Trading Quote of the Day (#EsxQotD)
“Isn’t it funny how day by day nothing changes, but when you look back, everything is different?"
~ C.S Lewis