Shopping Fever Sweeps Market!

It was a classic holiday trading week! Indexes performed beautifully, showing us the money, but not just that, we saw a not insubstantial number of pockets of momentum in different stocks, the result of a lot of speculative activity. What stood out last week was blockchain technology and digital currencies, which ignited a wild free-for-all in a lot of small-cap stocks. RIOT, for example, soared over 150%, rallying last week from $8 to $20. There are a few more examples of stocks that recorded double digit movement.

Not only did small-cap stocks record movement that wasn’t clearly grounded in fundamentals, but large stocks as well, like Amazon (AMZN), Apple (AAPL), and Google (GOOGL) ended the week with solid movement, helping push the large indexes to new and fresh all-time highs.

In Summary for the Week: The Dow Jones recorded gains of 0.9%, the S&P 500 also ending up 0.9%. The NASDAQ jumped to a new high, surging 1.6% on the week.

That being the case, it was a good week, market players in high spirits as we enter the best period of the year for the stock market. The best claim that the bears can put forth now is that the atmosphere is just too positive! Nothing spooks investors and even a precipitous drop in the Chinese stock market over Thanksgiving didn’t prompt even the slightest reaction in U.S. markets on Friday. Negative news has had no effect on the market. If the market sees even the most minimal drop, loyal correction buyers surface, gobbling up whatever they can get their hands on for cheap.

It’s easy to think too much in a market like this. When push comes to shove, what you need to do, is act – and then think! In other words, respond to price movement and then change your thought pattern only after price movement ultimately changes – instead of trying to anticipate when price movement will start trending differently. You can make more money if you ride the trend until its bitter end, whenever that might be, rather than making abortive attempts to try to identify at exactly what point the trend will halt in its tracks, with price movement taking a dip for the worse. That, in effect, is the biggest mistake made by many a trader in this market.

Another topic apropos for traders with bearish expectations is that it’s very easy to miss out on large speculative movement. If a trader is too focused on all the negativity out and about, he won’t be able to jump in and benefit from manic movements in stocks like RIOT, when they show their face.

Leading up to the last week of November, private investors are likely to be the new catalyst that can push the stock market to even higher places. Based on every metric, the stock market is in an excellent place: a healthy bull market fueled by solid earnings reports, a growing global economy and the promise of a significant tax cut. Some market strategists are warning that indeed after eight and a half years of gains, the bull market is approaching the last stages of its cycle, though, this has been precisely the point at which private investors have jumped in head first. The enthusiasm from this market has been growing and growing and it seems that over the last few months, more and more private investors have discovered the market and the promise it offers.

The Monday after Thanksgiving is historically weak, movement expected to taper going into this coming week. Most of investors’ focus will be on the initial tally of buyers’ purchases over Black Friday – and thereafter, Cyber Monday. The movement seen last week only strengthens the undercurrent of support in the market. The very same investors who missed out on the movement until now, are going to be looking for an entry point this coming week. Our projection is that they’ll be able to help prevent sharp reversal movements.

Have a great trading week!