It Smells Like Trouble, But the Bullish Trend Continues!

For days now, I’ve had this nagging feeling that something is amiss in the market. My intuition warns me of a looming bearish correction. If I consider the rule of alternation, everything points towards it being swift and of certain intensity, similar to what the Nasdaq 100 experienced last year when it plummeted from 16,000 to 14,000 points. This caution has me slowing down the pace of opening new strategies.

In recent weeks, I’ve actively recommended buying stocks from companies like Biogen, 3M, Montana Aerospace, Nokia, Freeport McMoran, Exxon Mobil, Darling Ingredients, Acciona Energías Renovables, Carnival, Newmont Gold Mining, Nutrien, Devon Energy, Plastic Omnium, RWE, Zebra Technologies, Porsche, and Global Dominion. However, at this moment, I prefer taking advantage of the rises to partially collect profits rather than making new purchases.

In these circumstances, I strongly recall one of the six premises of the Dow Theory, which I consider fundamental: “a trend remains in effect until it gives clear signals of a change of direction,” along with the premise that “prices discount everything.”

Analyzing the latest bullish movement that the stock markets have experienced since the end of last October, only on one occasion was this bullish trend questioned. However, at that time, Nvidia came to the rescue, creating a bullish gap that remains open in the main global stock markets and in most price curves to this day.

It’s important to highlight that, as long as the Nasdaq 100 doesn’t lose the support at 17,800 points, which corresponds to the top part of this gap, the bullish trend will remain valid, and it’s likely that the increases will continue. However, from an operational standpoint, I recommend caution and waiting for one of those dips in the market’s bullish tide before recommending new purchases again.