From trend analysis, it is still riding strongly on the bull trend. However, there are some factors that I take into consideration to either exit , take more or all profits and adjust stop loss. From the March low , NASDAQ is the best US index , out beating SPX500 and DJIA with 54% profits.
Here are some reasons that I am getting a little cautious about this bull run :
Increase number of Covid cases in US (while I think the possibility of another lockdown is remote, we must think rationally that people will be more fearful of going out when they read such news. As such, spending will be limited to boost the economy which the small businesses are already drowning without sales)
Chart wise, I think it might consolidate from here before it makes a decision to charge higher or tumble down for a correction (hopefully not a bear or revisit the March Low).
We already know that it is the tech stocks like Amazon, FB, Apple, Microsoft ,etc that are driving the stock market. If these stocks start to do a healthy correction (FB already started), then the probability of this index falling is higher.
So, it may be wise to take some profits and enjoy or keep it for buying when it corrects later. I mean, if the objective in trading/investment is to make money , then when profits is present, we must seize the opportunity to take it.
I know there lies the risk of taking the profits and seeing it run for another 10-20% and you feel left out. Alternatively, you can take 50-70% of your profits now and let the remaining units run its course with a tight stop loss in events the market corrects/fall.
Comment
⋅
a bearish engulfing closing candle yesterday. be alert now
good point brotha, one thing I'd like to add which should be discussed. We still have money on the sidelines still waiting to get back in which means even with some bad news there are still pouring money in that have felt like "they missed" out. Thats why I believe it can run a bit higher before a correction.
dchua1969
⋅
@PhiliciousP, thanks for your comments. Yes, I agree with you that it still has some room to go up and if you are comfortable, you can continue to hold on. To time the bottom and top to get out of position requires either luck or precision skills, neither which I possess, haha. So, to have a peace of mind, I relinquish some units and let the remaining run. That way, I have profits in my pocket as opposed to profits on paper and later regret not taking it earlier.
I wish you all the best, take care and safe trading.Cheers
dchua1969
⋅
@PhiliciousP, Thanks for your comments. I absolutely agree with you that there is too much liquidity in the global equities market. And it is highly likely that it might break new high before it comes tumbling down. It is good to be cautious when the retail buyers are getting into a frenzy now....