It has been a costly mistake if you have not invested in the market due to the concerns of Covid-19 pandemic. The market has discounted the impact of the pandemic as a whole except a few select sectors due to the unprecedented support from the monetary and fiscal policies. While still deep in the uncertainties related to the presidential election,
The year of 2020 has been proven to be nauseating, the amount of churns feels like being thrown in a washing machine on the spin cycle and not able to turn it off, between COVID, BLM, Election and the markets. However, the market has been unemotional and faithfully carried out the cycles and is pointing to a clear path forward from here.
Last Friday we sent an intraday alert to take profits in FSLY long trade. The exit alert was based on the fact that the NASDAQ index has been weaker relative to the Dow and S&P 500 indices. NASDAQ has a readable daily cycle top. With the both chambers of Congress going home without a stimulus package signed, it could spark a painful pullback.
The stark difference between the NASDAQ and Russel 2000 index in the last four-year cycle (February 2016 – March 2020) is displaying the economical paradigm shift in plain sight. The last paradigm shift that is similar to today’s took place during the Great Depression. Back then, 40% of the economy was Agriculture.
Last Monday the NASDAQ had a sizable momentum reversal on the downside. The following four trading days had very choppy indecisive rotations while certain speculative vaccine stocks were trading on high momentum and the stay home leading stocks such as AMZN and NFLX suffered badly to form a temporary top.
