The upward trend in global stock markets, particularly on Wall Street, is undeniable. However, this calm will end sooner or laterand we will once again witness one of those wonderful corrections that will move the indices 10% away from their last peak. These corrections are the ones that I always recommend waiting for before making new purchases in the medium term.
The last of these falls occurred last June and July, reaching its lowest point on the panic day of August 5. That day, when it seemed like the world was falling apart, I took the opportunity to start the first purchases in my twins’ wallets. They had been asking me for some time to invest their small savings, without knowing that their main capital was already in the Tressis Cartera ECO 30 fund. In fact, I doubt that they know it: they are more focused on their career and the tennis than reading. their father. , as it should be (when you become a father you will eat eggs…).
Many will wonder why I don’t recommend reducing exposure to the stock market if I consider that as soon as possible We could see a further drop of between 7 and 10%, which could lead the indices to seek support at the September lows. which, I remind you, represent the yellow line support, which I consider the first level to provide to confirm worrying buyer exhaustion.
The answer is simple: I follow the fifth principle of the Dow Theory, which states that a trend, whether bullish or bearish, remains active until there are clear signs of its reversal. Instead of anticipating the end of a trend, it is better to assume that it will continue until strong evidence, such as loss of key supports or emergence of bearish trends, indicate the opposite. Essentially, this theory encourages us to “follow the trend” until there is any evidence that it is over.
For this reason, I am not in favor of a slight reduction in exposure to stock markets as long as global indices remain above the first short-term supports, marked in early October, as the 11,560 points of the Ibex 35 or the 2,180 points of the Russell 2000. Precisely, the American small-cap index has not yet reached its 2021 highs, located at 10% of current levels. If these supports are not broken, I see no reason to think that this rally will not take place or that it could be delayed.
