PAY ATTENTION TO THE VIRUS IN CHINA AND WHAT HAPPENED TO THE LAST JANUARY ‘SKY IS THE LIMIT’ STOCK MARKET MANIA $SPY $QQQ $AMZN $AAPL $GOOG $MSFT $MU $INTC $NVDA

Twitter
LinkedIn
Facebook

PAY ATTENTION TO WHAT HAPPENED TO THE LAST JANUARY ‘SKY IS THE LIMIT’ STOCK MARKET MANIA $DIA $DJIA $SPY $QQQ $AMZN $AAPL $FB $GOOG $MSFT $MU $INTC $NVDA $AMD

History does not always repeat itself in the stock market, but it is always instructive.

Overbought markets tend to be vulnerable. Sometimes it is an exogenous event that topples stocks. What could be happening currently? Could it be that the deadly virus spreading across China stops the buying frenzy in stocks?

There is a mania going on in the stock market, but not in the terms you would think. Before you send me hate mail for raining on the parade, remember that The Arora Report gave a signal to buy stocks on Donald Trump’s election when many analysts were saying sell. Shortly thereafter, The Arora Report made a case for Dow 30,000 in Trump’s first term. Please see “Here’s the case for Dow 30,000 in Trump’s first term.”

Let’s explore the stock market mania that is going on this month with the help of an annotated chart.

Chart

Please click here for an annotated chart of ETF DIA,  which represents the Dow Jones Industrial Average DJIA.

Note the following:

• The mania is not in terms of stock market gains. The mania is in stock market gurus almost unanimously saying that all is clear. Trump will get re-elected, Democrats will be decimated for impeaching Trump, another new leg of the bull market has just started and the Fed will print more money — so goes the story that is propelling the bullishness.

Does anyone see any holes in this story?

• The chart shows that the last time a similar mania occurred was in January 2018.

See also  GREAT AI INFERENCE SURPRISE, NVIDIA DECLARES AI TIPPING POINT, JAPAN’S NIKKEI CROSSES 34 YEAR HIGH

• The chart shows that the relative strength index (RSI) is overbought, similar to the way it was during the January 2018 mania.

• Purists will say that this time RSI is slightly lower and has not been overbought for as long as the last time. Those purists ought to look at RSI on weekly charts of S&P 500 ETF SPY, which represents the popular benchmark S&P 500 SPX and Nasdaq 100 ETF QQQ. When looking at all three, the only unmistakable conclusion is that the stock market is technically overbought and vulnerable to a pullback.

• Based on proprietary indicators at The Arora Report, the sentiment in the stock market is not as manic as it was last time. In a perverse way, this is slightly positive in relative terms. Please see “Extreme greed in the stock market is producing a bad setup as earnings season starts.”

• The chart shows that a 14% correction occurred after the last stock market mania.

• The momo (momentum) crowd is aggressively buying stocks, but the smart money is lightly and selectively selling stocks into the strength. However, the smart money is buying technology stocks. Please see “Something rare is happening among popular technology stocks.”

‘This time is different’

Gurus would say that this time is different. During the last mania, the bond market became a problem, causing the correction; this time there is no apparent bond market problem. Actually, gurus could not see the bond market problem. They can talk about it now only with the benefit of hindsight. Certainly this time is different in many ways. However, the basics of greed and fear in the stock market and gurus coming out of the woodwork with bullish statements during a mania have not changed. (Where were these gurus when Trump was first elected?)..Read more at MarketWatch.

See also  PAY ATTENTION: A MAJOR RISK EVENT IS AHEAD – NVIDIA EARNINGS

A knowledgeable investor would have turned $100,000 into over $1,000,000 with the help from The Arora Report. NOW YOU TOO CAN ALSO SPECTACULARLY SUCCEED AT MEETING YOUR GOALS WITH THE HELP OF THE ARORA REPORT. You are receiving less than 2% of the content from our paid services. …TO RECEIVE REMAINING 98% INCLUDING MANY ATTRACTIVE INVESTMENT OPPORTUNITIES, TAKE A FREE TRIAL TO PAID SERVICES.

Please click here to take advantage of a FREE  30 day trial.

Check out our enviable performance in both bull and bear markets.

Subscribe to 'Generate Wealth'

Free Forever

More To Explore

30 Day Free Trial

Cancel within 30 days and you owe nothing

When you take a FREE 30 day trial, you get access to powerful techniques used by billionaires and hedge funds to grow richer. You can continue to use these powerful techniques to grow richer even if you cancel your subscription. You come out ahead by subscribing no matter how you look at it.

A fortune is to be made from AI stocks.
Get the list of 18 AI stocks to grab your share of the profits — no cost to you.

A fortune is to be made from AI stocks.

Get the list of 18 AI stocks to grab your share of the profits.

AI is a $1 Trillion Market

Making A Fortune
In Artificial Intelligence

Golden Age of Artificial Intelligence