For 23 straight weeks (from late October) – the market has effectively gone straight up. It added ~$12T in market cap with barely a pause – a rally for the ages. Now for ten of those weeks, it was in overbought territory – where the (weekly) Relative Strength Index (RSI) traded above 70. I cautioned readers of a likely (technical) correction. And whilst I stressed the market can remain overbought for several weeks (and it did) – it’s also an area to be cautious. This is where sell-offs start. And it seems we could be seeing the start of a 7-10% correction… however it’s still early.
Apple: Ready to Take Another Bite?
Apple is ~15% off its all time high as it lags its large cap peers. Concerns of iPhone growth and China have rattled investors. However, it’s not unusual for this stock to pull back. Since 2107, we have seen 11 retraces – offering patient investors buying opportunity. From my lens, Apple is a reasonable long-term buy around $165. And if you can get it cheaper – add to it. Over the next 3 years – I think it will be well over $200 as earnings top $8.00 per share.
Has Tesla Lost its Halo?
This weekend I was reading The Art of Thinking Clearly by Rolf Dobelli. The book has a chapter called “The Halo Effect” – and references the company Cisco (CSCO) during the late 90s / early 2000’s. It was timely – as it drew parallels to my post comparing the former market darling to Nvidia (NVDA). I demonstrated both technical and fundamental similarities. However, another company came to mind. Tesla (TSLA). For the past few years – TSLA had what Dobelli calls the ‘halo effect’. However, is that now wearing off? And what implications does this have?
Lessons from 1999/2000
Momentum is a powerful force. Bet against it at your peril. John Maynard Keynes was believed to have said “…the market can remain irrational longer than you can remain solvent”. Sound advice. Those expecting (or worse betting) the market would reverse to start 2024 are probably questioning their decision. It’s been one record close after another. Higher highs beget higher highs.
For a full list of posts from 2017…