The S&P 500 has been making higher highs through the first four months of 2021, along with infrequent pullbacks which have been mild and short-lived. When I was taking flight lessons, I was taught that the best time to develop an emergency plan is when things are going well. If you’re trying to find a nearby airport right when your engine cuts out, it may be too late!
With that in mind, I put together what I call “The Chart to Watch for Market Tops.” Most of the indicators on this chart are currently bullish, as they should be with the market making successive higher highs. But internal weakness and momentum changes should be reflected on this chart early on in a correction, which means this is the chart to follow to determine when to consider a rotation from risk-on to risk-off in your portfolio.
In today’s video we’ll discuss the following:
· How these five indicators are currently describing the market uptrend and confirming bullish conditions
· What signals would indicate a rotation from risk-on to risk-off and suggest a higher probability of corrective price action
· How some of the indicators speak also to leadership rotation and a potential improvement in areas like small caps and value stocks
For deeper dives into market awareness, investor psychology and routines, check out my YouTube channel!
RR#6,
Dave
PS- Ready to upgrade your investment process? Check out my free course on behavioral investing!
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. Please see the Disclaimer page for full details.