Do you remember the children’s game “Simon Says?” In the game, participants must follow the leader’s instructions only if prefaced by “Simon Says.” For example, if they say, “Simon says jump,” then everyone who jumps stays in the game. If the leader says, “raise your right hand” without the preceding phrase, “Simon Says” and you raise your hand, then you are eliminated.
Is it just me, or does the market seem to be playing a bit of “Simon Says” lately? For example, last week broker Canaccord Genuity downgraded Google’s parent company Alphabet from “Buy” to “Hold” and it triggered a noticeable slid in technology stocks. Apple, Alphabet, Microsoft, Amazon and Facebook, the five largest U.S. technology stocks, have seen their combined market capitalization fall by about $120 billion since then. That is enough capital to buy the Boeing corporation! All based on “Simon Says ‘Sell.’” Nothing about these companies changed, only an analyst comment and a growing sentiment that they were becoming overvalued.
My point, in pointing this out, is that the market is being driven more now by emotion than fundamental data. And that has historically been the mark of a top after Bull markets in the past. Am I calling the top now? Not yet. I’m just pointing out that we are seeing some “toppish” behavior. As long as the market continues up, I’ll go with it. And for charts and sectors that are presenting Bearish patterns, I’m going short. Firmly anchored in reality. I don’t care if “Simon Says” or not, I’ll do what price patterns on the charts tell me.
And by the way, speaking of technology and Apple, the charts are screaming “short” to me right now. I published a short trade in Apple to my Stock and Option Picks subscribers on Friday and there is still time to get in on this trade. Want to get in on it? You can see the details of this trade and several others that are still great, right now. Take a 30-day trial of my Stock and Options Picks now for just $39 and get a 25% discount on an ongoing subscription. Here is a link to find out more and to sign up: http://stage.followmetrades.com/products/39-stock-pick-trial/
As for Gold, the Bullish pattern that I had seen over the last several weeks is being challenged. I’m on the sidelines on Gold for now and waiting for clarification. This can change quickly and I’m ready to take some long positions when and if reality confirms that it is time. Still waiting for now . . .
Oil is still very bearish. It is getting clearer and clearer that more lows are coming. Nothing is ever certain in the market, but there are probabilities and the probability of more lows in Oil are high, based on technical analysis. Looking for prices to get down below $44, maybe even to $42.
That’s it for this week. Simon Says, “Stay tuned!” It won’t be boring and I’ll do my best to keep you informed.
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