Market is in blowout phase which can end abruptly without notice.
Either on news or no news @ all just overbought condition we may drop substantially in a day.
This is not an orderly market anymore.
Many stocks are over stretched to the point of insanity
Can it go on further.....maybe
Serious rotation will come into play, out from froth and into deep value
How to tell what is frothy and what is deep value.....very easy...it IS RSI number.
Here is the RSI for entire market / indices / sector :
TAN 79.40
SOX 75.20
XLF 74.87
IWM 74.28
Nasdaq 71.33
S&P 500 70.27
DOW 68.32
XLE 66.45
JETS 51.54
SLV 46.81
GLD 42.85
Solar, Semiconductors, EV and financials are getting lot of funds flow based on Democratic sweep and upcoming stimulus program.
Bottom 3 sectors are Airlines Gold & Silver.......
Other deeply discounted sector is Cruise lines....where there has been outflow...
Why do I analyze RSI about sectors / index / market.....it gives a very quick focus where to look and what to avoid immediately.
There are millions of equities trading in world exchanges, almost impossible to check individual stock RSI......
YES you must know where overall market IS and RSI does just that.
High fliers and deeply overbought stocks does not represent good Risk / Reward ratio.....and may be very stressful with wild swings on a daily basis.
It IS time to play extremely conservative when valuations makes no sense in short term
Many things are priced-in in many stocks, one needs to locate stocks which represent good Risk / Reward ratio plus good prospect going forward are being ignored based on " current environment "
Stock market always looks ahead 6 months, thus try to predict environment of July 2021....things may be lot different than today.....
Once you narrow down sectors which is NOT deeply overbought then find stocks which offers " compelling bargain based on 2022 earnings "
Good luck with your own analysis and strategy.
BLOG does NOT give buy or sell.
Saleem
7 comments:
Hi Saleem,
Last week: +5.21% (YTD: +5.21%)
Notable Leaders: EH LITE GRWG TPR ELY EAT TWLO
Notable Laggards: FDX SUMO COTY
The year started off nicely with broad-based buying across sectors. The diversified nature of my portfolio allowed me to participate in many good gainers. Going forward, I think any uncertainty provides opportunity as profits at companies should increase dramatically in 2021 and 2022.
Holdings: TPR GRWG EAT TWLO FDX ELY SUMO LITE SNAP GM COTY SHOO HCAT EH, cash 10.6%
Stocktrader
Hi Saleem,
Started a position in MSTR @ 467.06
This is basically a pseudo-bitcoin position which I think needs to be a part of every portfolio.
Stocktrader
Hi Stocktrader,
Last week UP 5.36%
YTD UP 5.36%
Saleem
Hi Stocktrader,
Good luck with Saylor firm MSTR.....he is definitely a thinker!
Saleem
Hi Saleem,
Bought MTCH @ 151.58
I think dating will be one of the first activities to return as people want to get back out there and socialize.
Stocktrader
Hi Stocktrader,
Good luck with MTCH!
Saleem
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