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Reddit Revolt January 30, 2021

Posted by Tom in Thoughts.
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January 29, 2021 – This will be short since I’m typing on a small keyboard & screen. The long awaited pullback is here and it’s long overdue. Volatility is with us and likely will be for all of 2021. The NASDAQ Index (below) pulled back near the 12950 level. We could expect that support to hold in a bullish market so let’s not overreact to this (actually) minor pullback.

click on chart to enlarge

Money and Volume Flow indicators are “bearish”, Sentiment and Price Strength are “neutral”; volume is very high, as expected with a major “short squeeze” with positions being covered / closed out.

What happens by mid next week will be telling for the market going forward. The pie chart below shows how the stocks in the broad S&P 1500 Index did last week. As expected, more “red” on the pie chart as stock fell across the board. But let’s take a step back and note that little has actually changed from a market conditions point of view.

My detailed market timing model does NOT indicate significant trouble ahead, so I have done only minor adjustments this week. The key here is follow through. Will the “smart money” come in and buy this dip or will there be more selling? (I’m thinking “buy the dip” at discount prices; we’ll see.)

The short term sector table is below.

The control of COVID and the resulting impact on the world economies are the important thing right now, so let’s keep focused on those bigger priorities. Have a good week ! ………… Tom …………

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