Price action so far is still quite bullish and any bit of selloff is met with eager buyers. Last week's AAII survey showed more than 60% of respondents were now bullish, versus just 24% bearish. That's one of the biggest spreads I can ever recall seeing. But it's a contrary indicator! Also, my friend's 15-year old son tells me he's gone "all-in" on Dogecoin. This indeed a world of exuberant euphoria😇. After all, it is April, a seasonally bullish month of the year. So fear of what?!
About half a year ago, I said we should expect a turnaround for banks. Since then, many banks have indeed shot up 20-30% or more. But I'm afraid the market has probably priced in a perfection for banks right now with a quite high expectation for their recovery. However, by checking their TA, I see a different story: ostensible sign of divergences! This is often an early indicator of the upcoming change of the trend. Below is the chart for BAC but virtually all the banks are showing the same pattern. We are entering the earning season this week with banks reporting their earnings first. Will be interesting to see how the market will react to their earnings. Judging by their TA, I won't be surprised to see some disappointed reactions. Be prepared!
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