The Most Hated Rally In Recent Memory
I've been trading and investing for nearly 20 years and this is one of the most hated rallies that I can remember.
The disconnect in stock prices from the negative headlines and dreadful economic data from the effects of COVID-19, has created confusion and frustration among those who think stocks should be getting sold.
The NASDAQ is up over 35% and sits less than 5% away from it's all time highs, yet investor's are the most pessimistic since 2013. I guess the FOMO trade could still have plenty of gas in the tank...
Focusing on price action and trends has treated me well over the last few years, allowing me to ignore the ever increasing noise that bombards my social media feeds and inbox on a daily basis.
Trading is easier and more consistent when you quit focusing on the "why" and instead take price for what it is and what it's doing.
Freeing yourself from your bias or what you "think" stocks "should" be doing allows you to be more flexible and quicker to adapt to changing market conditions.
Over the last month the relative strength of the NASDAQ has allowed me to focus on swing trades in the strong performing software sector, even know other segments of the market haven't been lagging, such as financials and small caps.
Right now the stock market is more of a market of stocks. There have been great opportunities in common names such as the FAANMG stocks but also momentum in individual names in software and semiconductors.
The leadership has been consistent even before the crash in March and has provided great opportunities over the last few weeks for those that were able to ignore the noise and focus on price action.
NASDAQ 100 Index - NDX
Combined chart of the large cap technology names FB, AMZN, AAPL, NFLX, MSFT & GOOGL
Software sector ETF - IGV
It's not clear where stocks will be one month or even six months from now but the intermediate term trend has clearly been to the upside in technology.
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