Overbought Resistance!
Last Tuesday, the S&P 500 surged 2.6%, triggering a Follow-Through Day (FTD). FTD occurs when an index rises more than 1% on heavier volume than the prior session, at least four days after a market bottom. While not every FTD results in a new bull market, historical research by IBD founder William (Bill) O’Neil shows that an FTD has preceded every bull market. Bill advises investors to find something to buy that meets his criteria after an FTD to help them mentally shift from defensive to offensive. His books and the CANSLIM system—through which he built his self-made fortune—have shaped my investing approach. It typically takes 4 to 5 years to adapt CANSLIM to one’s personality, and I’m well positioned to reap the benefits.
About 25% of my portfolio is allocated to a gold ETF, and around 8% is invested in select stocks. I’m cautiously looking to seeing whether this FTD holds or if the market experiences a third leg down. The market has rallied for four consecutive days, running into overhead resistance, leaving it overbought and ripe for back-and-fill action. We’re still trading below key defensive levels, the 50-day and 200-day moving averages, but the market’s tone suggests it wants to move higher.
This week brings a wave of earnings reports from market leaders, which could set the tone for the coming weeks. Meanwhile, the dollar is trending lower, signaling that a rate cut could be on the table at the Fed’s June meeting. Since gold is priced in dollars, a weaker dollar should support higher gold prices. Retail giants like Walmart and Costco show strong chart patterns, suggesting a bullish sign of consumer strength. Oil prices continue to drift lower (a result of an additional 3 million barrels per day hitting the market), which makes it more challenging for bad actors to fund their agendas and help keep inflation contained, as oil impacts the cost of almost all goods. Bonds are chopping sideways without a clear trend for now, but that could change as the Treasury works to refinance trillions in existing debt. Grace & Peace to you and your loved ones!
Watch List: APH, PLTR, IDR, SEZL, SFM, LRN, PEN, AXON, ATGE, SE, FTNT, CALM, HWM, EAT, WGS, MRX, ADMA, NWG, ZS, CPRT, OSIS, UTI, BROS, KINS, AVGO, PHYS.
Blessed is the one who finds wisdom and the one who gets understanding. Proverbs 3:13
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Dexter Lyons, Portfolio Manager
337-983-0676, ChristianMoneyBlog.net
100% BRI, Honoring God with Our Investments!
Actively Managing Risk Since 1990!