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Technical Market Indicators
Dow Theory, W.D. Gann, MetaStock, system tester, indicator builder, custom formulas, momentum, overbought, oversold, buy, sell, signals, top, bottom, Bull, Bear, consolidation, sentiment, contrary opinion
January 18, 2021
Stock Market Outlook: are investors finally turning their attention to the potential risks?
Preview from my weekly report*
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"What goes up must come down, Spinnin' wheel got to go 'round"-- Blood, Sweat & Tears
To summarize the current situation, stock prices sagged last week as investors appeared to turn a little bit of their attention to the potential risks: bitter social divisions, toxic politics, corruption in high places, censorship, distorted and biased opinion masquerading as news, a persistent epidemic, vaccine shortages, ruinous business lockdowns, excessive speculation, greed, etc.
CNBC reported that public health officials and infectious disease experts say there is a high likelihood that Covid-19 will become an endemic disease, afflicting our world at all times endlessly. Vaccine maker Moderna's CEO Stephane Bancel said, “SARS-CoV-2 is not going away. We are going to live with this virus, we think, forever.” (He didn't say that would be good for Moderna's business and his net worth.)
Last week's stock market preferences may be telling us something significant about market rotation of leadership and shifting investor attitudes. Industry sectors that previously had been market leaders underperformed last week, including Communication Services, Technology, Consumer Discretionary, Materials, and Industrial. These underperformers are mostly cyclical sectors subject to the rise and fall of the economy.
Meanwhile last week, less cyclical and more defensive sectors outperformed, including Energy, Real Estate, Utilities, Financial, and Health Care. This implies more of a cautious, risk-off tilt.
Investor sentiment indicators have been pointing to greed and bullish complacency for many months. The stock market is overbought and overvalued relative to traditional measures: earnings, dividend yields, and book value. Stocks are priced for an extremely optimistic future, ignoring all potential bumps in the inherently unpredictable road ahead. Volatility has declined substantially since March, but volatility fluctuates and easily could rise again. We want to be ready for anything in 2021 because, like 2020, anything could happen. Above all, we want to be safe and survive, because that always is the most important thing.
Our full report reviews indicators that we monitor every day and offers clear and unbiased guidance on the following each week:
Global stock markets
The Defensive stock sectors
The Health Care sector
The Cyclical sectors
The Technology sector
The Financials sector
U.S. bonds and notes
Commodities (Oil, Metals, Agriculture)
Objective Quantitative Rankings for hundreds of Exchange Traded Funds
Now is the time to take action. Preserve your capital by placing your assets under our careful management--before the next major bear market of -20% to -50% devastates most portfolios.
Make no mistake, the ongoing global economic and financial crisis has not been fixed by any sound or lasting solution. History shows that the authorities will not protect you or give you any advance warning--but we will.
If you agree that making money while staying safe is better than taking big risks in the stock market and exposing your nest egg to potentially ruinous losses, we would be very happy to implement our time-tested strategies for all of your assets. It makes good sense to choose protection--especially at this time when the financial world is stretched out of proportion.
We are always happy to discuss your goals and concerns and answer all your questions.
Call us now for a free consultation.
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Weekly Rankings of Major Trend Relative Strength
My weekly Top 10 ETFs ranked by the Major Trend Relative Strength outperformed the S&P 500 by over an 11-year period of real-time weekly tests. Click here for a graph of simulated performance.
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See The Colby Global Markets Report (click here).
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My ETF Rankings are not investment advice. Rather, they are an objective ongoing research study.
Analysis of market forces may offer a sense of probabilities. But the many variables that can impact market prices are notoriously difficult to predict. And, market analysis is something less than an exact science. So, sound trading tactics are always recommended. See my Money Management Rules.
According to CFTC Rule 4.41, hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown.
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