This TAPE is challenging old understanding of overbought indicators, it is defiant in its action, many including me are giving up on old valuation metrics of overbought stocks.
IF you had followed old valuation metrics of selling @ 60 RSI...you would have missed 50% of UP move in every strong stocks.
Most strong stocks are trading in mid 80 RSI....
All of the above is telling everyone that something has changed in US stock market.
By the time everyone will adjust to " new norm ".....markets will be substantially higher....
This week is "mother of all earnings report"
Here are few stocks who are all set to report earnings this week :
Monday STX....RSI 85.06
Tuesday AMD RSI 65.25
Wednesday FB RSI 62.86
MSFT RSI 80.17
Thursday AAPL RSI 41.96
GOOG RSI 82.07
AMZN RSI 86.31
As you very well know, all the stocks in 80++ RSI are expected to report good results, they are expected to go even higher....case in point NFLX with good earnings went further UP 3 days in a row, currently sporting an eye popping RSI of 90.26.......enough said.....
SO....this TAPE is lot different than PE of 5 where we traded for decades and all technical metrics developed and followed from that kind of environment......
NOW..PE of 26 is mighty fine...so RSI of 90 is fine also.......
Things have changed and those who are looking in "rearview mirror " are being left behind in droves....
SO....make your daring move into 2018 market, it may require totally different strategies than what you were used to for decades......
Good luck with your own understanding of this TAPE and your own comfort level.
BLOG does NOT give buy or sell.
Saleem
2 comments:
Hi Saleem,
Last week:
Performance: +1.97% (YTD: +8.94%)
Notable Winners: HCLP TRIL EMN OPTN TNA MU
Notable Losers: LITE ACIA
It was a fairly nice week for the portfolio despite some troubles in the optical sector. I ended mostly on par with the major indices but did handily beat the lagging Russell 2000 (small caps). I can't understand why the small caps aren't performing better given the tax reform and US economic backdrop impacts them most directly and positively. I guess we'll see if any catchup trade plays out going forward.
I am fairly afraid of the indices at these elevated prices, sentiment, and relative strength. I used last week to cut a few parts of the portfolio that I thought had less potential upside due to spent catalysts and/or peaking valuation. The action on Friday specifically I thought was borderline "foolish", which tells me we are very close to a consolidation/pullback time. These thoughts have not worked at all this year, but Friday really seemed like too much of a good thing for no reason.
Current holdings: BAC EMN HCLP MU OPTN GPK ACIA LITE TRIL, cash 29.3%
Stocktrader
Hi Stocktrader,
Last week was UP 2.12%
YTD UP 19.99%
Saleem
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