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Nov. 5, 2021 - The market price action has been very positive and strong as earnings continue to be good to very good and the economic numbers show a continued rebound. What’s there not to like? Well really, not much. Last weeks “Steady as She Goes Captain” title pretty much sums it up. But the rate of upward movement is not typical, at least not for long. I still think that we’ll see some volatility during the rest of the year. Nothing terrible but some small pull backs. Seeing renewed strength during these pull backs will serve as a positive confirmation of the overall trend continuation . . . . up.
A quick look at the chart shows what I mean. That 45 degree climb over the past 3 weeks has been great, but let’s not get too complacent about “that’s what it’s supposed to do”. Our attention may rightful shift to focusing on whether sector rotation comes into play. The general market indexes may be climbing to lofty heights but is the participation equal? Also, is money shifting around from one sector to another as the leaders become “overvalued”?
It’s good to see the Technology sectors back in the lead, but the question is how long can that continue? I think it’s wise to keep an eye open for slowing and stagnation in these groups over the next few months and pay attention to others that are rising. My message is: don’t fall in love with any sector or stock. It may be great now, but “tomorrow is promised to no one” and things can, and will, change.
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