The stock market's reaction to a heavy week of earnings reports was not encouraging. It reinforces the view from last week that now was not time to jump back into the stock market despite the widespread bullishness. The drop this week is likely to reduce the bullishness but a tradable low for the overall market many be a number of weeks away.
The sharp gains on Monday were accompanied by signs that the rally was fueled by just a few stocks as I noted in Tuesday's Narrow Advance Warrants Caution. The technical weakness did not support the new highs in the Nasdaq 100 which ended the week down over 2%.
According to AAII 32.7% of individual investors are were bullish as of last Thursday with just 25.6% bearish. The largest group are neutral and overall there was little change in the sentiment last week. The CNN Fear & Greed Index dropped from 32 last week to just 12 this week. In August 2014 it did drop into single digit territory just a week before the market made its low.
So what can investors do to ride out the correction during earnings season?
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