Being an Optimist – March 6th 2021

The wild swings on the $SPX ended up with a slightly higher finish than last week. The Nasdaq was down a little. Friday had a big hammer candle. A hammer candle is a market open near the top of the candle, goes lower during the day, then reverses and closes near the highs again.

Many of the momentum names have come down 50%. Is this their low? Or is this just the beginning of the move down? Optimism is always warranted with big 4% intraday swing. Very hard to be short with that price action too. Energy and financials continue to be solid.

The US senate passed the 1.9 T stimulus bill this weekend, so it should probably be signed by President Biden sometime soon. Next is a $3T infrastructure bill. Hard to comprehend how trillions can be spent so fast. The spending ignites the Bitcoin bulls, who talk about the currency printing debasing the world, but the same debasing continues to deny the gold bulls a bid. Gold had a tough week, failing to rally even in a rocky market.

I could sit in a waffle house all week, waffling back and forth between bullish and bearish. With the stimulus backdrop, can it possibly pay to be bearish? Conversely, we haven’t broken the analogy to the 2000 market top. A break above the downtrend lines will get everybody bullish. My Schnell Strength indicators started to bounce. Money showed up with volume on Thursday and Friday, creating the hammer candles. I lean into being an optimist. I bought stock on Friday after sending out my article to look higher, not lower. Conviction level is about as good as the one-out-of-two-popping odds of Orville Redenbacher, the popcorn king. Last week I was all bearish, but seeing that second hammer candle, suggests the buyers are there.

Summary: I have added to my oil positions on the back of the extremely bullish OPEC announcement and bought a few stocks Friday as the Schnell strength indicators improved. The market is hard to judge here. It is definitely not the wind-at-your-back investing moment. If you’re a market technician, right now it’s a pretty confusing control panel. Spin the dials, and we’ll see what happens. Let’s hit the charts.

To continue reading click the link below…