Global stock markets are mostly higher today following Tuesday’s rally on Wall Street. In the U.S., however, the Dow Jones opened lower while the S&P 500 moved higher.
I’m still concerned that momentum levels for the S&P 500 and Nasdaq 100 are above the 90th percentile, which means markets are grossly overbought. And if President Biden’s $1.9 trillion stimulus plan isn’t passed, we could remain at these levels for quite awhile.
That means we need to be cautious...
At the same time, large-cap stocks like Humana are breaking below their 200-day moving averages and making predictable short-term trades to the downside.
In today’s video, I’ll explain why I’d be cautious initiating a long position on stocks that are not pulling back right now… if the Dow Jones could trade above its 50-day moving average for the second day in a row… and why we’re seeing a lot of market vulnerability right now.