Market summary 19/7/2023
Market summary
The bullish trend continues to gain momentum in the markets. Both the NYSE and Nasdaq composites experienced a significant surge in new highs, and small caps outperformed, posting a 1.2% increase, overshadowing the QQQ's 0.82% advancement. Although the market's swift upward pace might continue, it's essential to start considering strategies for the inevitable market pullback. My focus is now on reducing exposure to non-leading stocks to mitigate potential losses during market declines while also accumulating capital for reinvestment opportunities during these pullbacks.
So, how do we identify the leading stocks? My go-to strategy involves observing the rate and extent of a stock's appreciation following a period of consolidation. Take $Tesla(TSLA.US$ as an example: it surged by 20% in merely six days after breaking out of its double-bottom base on June 1st. Conversely, $Cadence Design Systems(CDNS.US$ , which exited its base on May 25th, has seen only a 12% rise after 35 trading sessions.
This strategy provides an impartial ranking of stocks based on market performance. It is important to note that I'm talking about the best-performing stocks, not necessarily the best companies. Top-tier stocks typically experience the most significant appreciation and the smallest corrections. On the other hand, second-tier stocks tend to see smaller gains and more significant corrections.
As the market gets stretched, it's crucial to perform this analysis, helping us decide which stocks to hold onto patiently and which to sell while they're still strong. This strategy ensures we can repurchase or reallocate our capital at a more opportune time. It also underscores the importance of selling second-tier stocks while they are still robust, as they tend to fall quickly during corrections.
The bullish trend continues to gain momentum in the markets. Both the NYSE and Nasdaq composites experienced a significant surge in new highs, and small caps outperformed, posting a 1.2% increase, overshadowing the QQQ's 0.82% advancement. Although the market's swift upward pace might continue, it's essential to start considering strategies for the inevitable market pullback. My focus is now on reducing exposure to non-leading stocks to mitigate potential losses during market declines while also accumulating capital for reinvestment opportunities during these pullbacks.
So, how do we identify the leading stocks? My go-to strategy involves observing the rate and extent of a stock's appreciation following a period of consolidation. Take $Tesla(TSLA.US$ as an example: it surged by 20% in merely six days after breaking out of its double-bottom base on June 1st. Conversely, $Cadence Design Systems(CDNS.US$ , which exited its base on May 25th, has seen only a 12% rise after 35 trading sessions.
This strategy provides an impartial ranking of stocks based on market performance. It is important to note that I'm talking about the best-performing stocks, not necessarily the best companies. Top-tier stocks typically experience the most significant appreciation and the smallest corrections. On the other hand, second-tier stocks tend to see smaller gains and more significant corrections.
As the market gets stretched, it's crucial to perform this analysis, helping us decide which stocks to hold onto patiently and which to sell while they're still strong. This strategy ensures we can repurchase or reallocate our capital at a more opportune time. It also underscores the importance of selling second-tier stocks while they are still robust, as they tend to fall quickly during corrections.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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