Confirm everything. Sector Focus: [Buy this Stock ASAP!]( Wall Street Veteran has picked the most profitable stocks in the market. He bought Amazon in 1998... Tesla in 2013... And Qualcomm in 1999... And has picked recent winners like these: And for a limited time... he is revealing his [#1 Stock for 2023.]( Weekly Market Update Today is October 20, 2023 Dear reader, Hello and Happy Friday. Hereâs an image calculated to strike fear into the hearts of investors. It shows the performance of the major averages this week. This, after a week where we saw strength beginning to return to the market. In the images below, red boxes are sectors that the bears control. We went from a picture (on October 3) where the bears controlled every single market sector... To one where the bulls had clawed back control of nine sectors. Investors have come to expect this kind of âwill-it-or-wonât-itâ behavior from the market this year. Weâre all asking: âWhereâs the long-term bottom?â And many of us are uncomfortable with tentative answers. But a market bottom is a process, not an event. Of course, there will always be that one particular day we can point to and say: âTHIS was the bottom. This was the day the market got as low as it was going to go before heading higher.â Last year, that day came on October 13th. In fact, the Thinkorswim platform even labels the low for you. In the correction of 2018, the low came, like a tardy Santa, on December 26. Trouble is, that day is VERY easy to spot in hindsight. And itâs always a mistake to âpredictâ when it will arrive. This year, S&P watchers thought they had spotted the tell-tale sign of a market low. The smoking gun was something called a âbullish engulfing candle.â Most chartists use candlestick charts, which have a âbodyâ and two âwicksâ â one at the top and one at the bottom. In the chart below, you can see the purple arrow pointing to the green engulfing candle that occurred on October 6. The market did indeed rise for three days after. But there was a problem â no bullish confirmation, so the validity of that up-move was in doubt. You gauge validity, we use trading volume. The S&P (SPX) is an index, and canât be traded directly. Hence, no volume is shown underneath the price. To see volume, we look at the SPDR S&P 500 ETF Trust (SPY). This is a tradable ETF, and does depict trading volume in a panel underneath price (highlighted, below). Notice how when the volume bars do poke above the green line (showing average volume) the bars are red. Those are down days. Volume is higher when the market is falling. That engulfing candle was a poor omen. (Again, this is crashingly obvious after the fact.) The lesson here? Wait for confirmation of EVERYTHING. Assume nothing. Never think the market owes you anything. More likely than not the bottoming process has a ways to go. If youâre going to hedge â do it. But do not overdo it. The bottom is coming, and it wonât come like Christmas â predictably and on schedule. And when it does, the market could pop higher like the little man in the jack-in-the-box. Have a great weekend, and Iâll see you next week. Bill Spencer
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