Stocks Climb a Wall of Worry, Technical Analysis Broken

Stock-Markets / Stock Market 2023 Jun 20, 2023 - 09:59 PM GMT

The stock market is literally climbing a wall of worry, refusing to give any opportunity for the mass of investors sat on the sidelines to jump on board the AI gravy trains unless they buy the highs! Most AI tech stocks are now very overbought i.e. Nvidia, Microsoft, Apple, KLAC, AVGO which had an insane spike last week to $933 that triggered one of my distant SELL limit orders at $899 (current $812).

Whilst many are very overbought that does not mean they cannot become more overbought! This is the problem with TA, the charts tells you that markets are over bought and ripe for a correction, and so one anticipates a fat juicy correction to accumulate into on buying opps perhaps down to below S&P 4000, but as I often state Technical Analysis on it;s own is a coin flip, and worse still is that which most focus on the S&P which is a RED HERRING! Put the two together and you can see how easy it is for most investors to be constantly wrong footed by a. focusing on the S&P and b. not realising that TA is not that reliable going forward, in hindsight its perfect, but going forward it's at best 55/45. One has to go beyond the charts and crunch the numbers and understand the fundamentals that differ for every stock.

Against this there is -

a. The TREND which refuses to point blank DROP, the S&P is making higher highs and lows WHILST OVERBOUGHT.

b. Most investors had been convinced by the cartoon network (CNBC) that the debt ceiling nothing burger was going to be catastrophic for stock prices hence record amounts of cash are parked in money market accounts, there just aren't enough actual bulls for this market to drop hard!

c. The June rate hike that is now the focus of attention could turn out to be another nothing burger, why? Because the market is going higher!

d. The roadmap that is blind to all of the nothing burgers is telling me, you, everyone we are heading for 4500 this summer, it's now June, so 2-3 months, so can we really fall to sub 4000 and then go to 4500? There has to be the time for such trends to manifest themselves.

(Stocks Bear Market Max PAIN - Trend Forecast Analysis to Dec 2023 - Part1 )

e. June seasonally is supposed to be a weak month, so technically being at the high going into June this 'should' be setting us up for a decent correction, there it is again Technical reasons which just are NOT working right now. Technically everyone who looks at a chart has been on the WRONG side of the markets, shorting it as it goes higher all the way until they thrown in the towel and cover and THEN it corrects!

YES it is a fact that most traders are BEARISH and most investors are sat on the sidelines as illustrated by my last article.

This BULL MARKET is not making it easy for those who want to buy to BUY! I have often written over the years that you will know when AI has taken control when AI tech stock prices are inexplicably keep climbing higher,it could be now!

There are still cheap stocks out there in the unloved sectors such as financials (GPN) and healthcare (Pfizer, ABBV), and even a few tech stocks are in or near the zone - CRUS, HPQ, QCOM, so not being crippled to fall into the trap of following the indices there are nearly always opportunities to accumulate. In terms of trimming, I'm done unless the AI tech stocks ramp higher by another 15% to 20% to trigger more sell limit orders.

The bottom line is we have ALWAYS been heading for S&P 4500, which means June will see the S&P trade above 4300 which would set the scene for 4500 during July as I cannot see how sub S&P 4000 during June can deliver 4500 by Mid August by the latest, there is just not enough time for that to play out despite personally being positioned to capitalise on a correction that now may not materialise until later in the year, you don't always get what you want. So if the FOMIO continues I'll trim a further 2 to 4% , if the S&P does decide to drop to say 4000 I'll probably buy about 3% to 6%. it could be worse, could be parked in money market accounts wishing I had not listened to the cnbc cartoon network when stocks were cheap when they peddled their buy t-bills, sell the finished big cap tech stocks line that likely prompted many investors to do the opposite of what they should have done at the time.

This ARTICLE is an excerpt form my recent analysis on the current state of the stocks bull market as it FOMO'd to new highs Current State of the UK Housing Market as Stocks Climb a Wall of Worry that was was first made available to patrons who support my work.So for immediate first access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $5 per month. https://www.patreon.com/Nadeem_Walayat.

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S&P

Targetting 4500 Mid Summer 2023.

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By Nadeem Walayat

http://www.marketoracle.co.uk

Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

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