Minerva Market View for Jan 18, 2024
Markets continue chopping up and down. Here's what we're looking for to get clarity on direction going forward.
Markets continued their up-and-down chop as we have been anticipating. Even though the major indices finished positive for the day, underneath the surface several indicators are flashing signs of weakness. In previous posts, we’ve covered those factors (breadth, RSI, Bullish Percent Index, seasonality, advance-decline line, distribution days, etc.), so we won’t rehash them here.
Our current path for the markets is to attempt and maybe even exceed all-time highs, but then fizzle out from there in a sideways or downward pattern. As always, we are open-minded and if the rally were to resume on strong breadth and stocks start breaking out and following through as they did from November through December, we will jump back in.
Tomorrow, to add to the excitement, we have 3 Fed speakers who will try to sound hawkish. And of course, we have options expiry which will add to the volatility. The trading plan is to not do much of anything as there aren’t too many great setups on the long or short side.
Portfolio and Performance
Several of our holdings posted >1% gains today (primarily AI-related stocks) while shorts detracted from performance.
Watchlist
Not too many picks for tomorrow:
Long: DFH 0.00%↑ OILK 0.00%↑
Short: TAL 0.00%↑ RNW 0.00%↑ MDB 0.00%↑ AFRM 0.00%↑
2 interesting stocks that might have put in blow-off tops with diverging RSI - we will have to see tomorrow’s price action to confirm:
Worth checking out
A refreshingly candid and informative interview with Sean Ryan (top performer for several years running in the US Investing Championship and son of two-time champion David Ryan):
That’s all for now - happy trading!