This Is How You Keep the Bulls Honest
If you've been holding the hottest stocks, Monday was probably a challenging day.
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The market action on Monday was dominated by rotation back into the Magnificent Seven and big-cap technology names. Extended small-caps and Bitcoin-related names took a rest, and some other leading sectors, such as space exploration, saw profit-taking.
This is the sort of action that the market needs when some areas are becoming a bit too frothy while other areas are finding their footing after taking a rest.
If you have been holding the hottest stocks, then Monday was probably a challenging day, but if you have been picking at the pullbacks in the Magnificent Seven, then that probably paid off. It is very likely we will continue to see that sort of action continue into the end of the year.
This is the last week of substantial economic news in 2024 and will set things up for the Fed interest rate decision in about two weeks. We have JOLTS Job Openings news, ADP employment, and November jobs numbers to end the week. This will influence the odds of a quarter-point cut and will also have an impact on the Goldilocks economic narrative.
The bears are focused on a number of arguments for why the positive trend can’t continue, but there isn’t any indication yet that the bulls can’t keep running. Both sentiment and technical conditions are strong, and profit-taking, as we saw on Monday, helps to create a little wall of worry that keeps the bulls honest.
Have a good evening. I’ll see you Tuesday.
At the time of publication, Rev Shark had no positions in any securities mentioned.
