πΊ Did The Peace Deal Just Restart The Bull Market?
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@TedHZhang notes that the market may have just received exactly what bulls needed.
Following the weekend peace agreement, stocks surged back into an uptrend as major indexes reclaimed key moving averages and closed above critical technical levels.
$SPX recorded its second consecutive close above 7,500,
$QQQ gapped higher and finished near session highs, and the Dow Jones
$DIA pushed to fresh all-time highs.
Market leadership, which had deteriorated during the recent pullback, is also beginning to heal.
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The move wasn't limited to a handful of mega-cap stocks. The rally broadened across the market.
Mid-caps
$MDY, small caps
$IWM, equal-weight index
$RSP, and growth names all participated, suggesting improving breadth beneath the surface.
While some indexes faded late in the session, the overall technical picture strengthened considerably.
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The peace agreement also triggered a classic risk-on reaction across asset classes.
$VIX continued to decline,
#crudeoil $USO broke lower, and inflation-sensitive areas benefited from the prospect of lower energy prices.
A breakdown in oil is particularly important because it reduces inflation pressure and improves the macro backdrop for both consumers and corporations.
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Defensive assets showed a different story.
#Gold $GLD rallied toward its 200-day moving average but failed there and reversed lower.
#Silver $SLV remains in a broader downtrend despite a short-term bounce.
#Bonds $TLT attempted to rally but finished largely unchanged, while
#yields $TNX $TYX barely reacted to the geopolitical developments, an interesting divergence worth monitoring.
#Bitcoin-related assets may also be showing signs of improvement.
$IBIT undercut and reclaimed an important low while longer-term moving averages continue to catch up, potentially laying the foundation for a more durable bottoming process.
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With the market backdrop improving, portfolio exposure was increased.
Additional capital was deployed into
$NBIS,
$SNOW,
$VIAV, and
$DOCN, while a new position was initiated in
$WGMI and
$BE, which is also showing signs of a potential breakout after reclaiming its 21-day EMA.
Existing positions include
$GH,
$LLYX,
$CSCO,
$CRDO, and
$FTNT β all continue to act constructively.
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Despite the improving technical picture, volatility remains elevated.
$SPX ATR is still running above normal levels, suggesting traders would like to see volatility contract as prices continue to rise.
That combination would provide stronger confirmation that the latest advance is sustainable.
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The next major test arrives Wednesday with Kevin Warsh's first FOMC meeting.
The market has regained its bullish footing, but investors will be watching closely to see whether Warsh reinforces the new uptrend or introduces a fresh source of uncertainty.
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For now, the peace agreement has reignited risk appetite, broadened participation, improved leadership, and pushed the market back into an uptrend.
The question is whether this is simply a relief rallyβor the beginning of the next leg of the bull market.
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Watch this Short video where we break it all down in detail π½