This past week the markets’ “momentum up” condition of the past several months accelerated with all the major timeframes now trading “momo up” marking a significant turning point where it seemed like stocks and investors could do no wrong.
It’s always useful to remember that markets and traders alike ebb and flow between “payout cycles and payback cycles”.
If you haven’t guessed it this is one of those payout cycles.
Unfortunately embedded in each payout cycle are the seeds of the next payback cycle.
As stocks climb, anyone and everyone seems to be making money with little risk.
This lures investors and traders to take more risk, and chase high flying stocks in the attempt to capture even more quick profits.
Unfortunately, markets that trade on momentum often leave behind poor market structure that leaves them vulnerable to sharp pullbacks.
These pullbacks when they occur will ultimately stop out all the weak and late longs who are late to the game and have poor trade location.
At the same time, it’s important to be diligent in times like these and avoid the temptation to try to call a major top because markets can always trade a lot further than you can remain solvent.
In this week’s video, I analyze the momentum found across all of the NA indices as well as the weak market structure that is supporting the current stock market rally.
Watch this week’s Weekly Outlook video to see the setups and levels we’ll be watching as well as the technical outlook for the VXX SPY QQQ IWM DIA EEM TSX TLT GLD BTCUSD ETHUSD EEM FANG and more for the week of Weekly Market Outlook For – January 20 – 27, 2020.
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