In last week’s strategy article, I highlighted that we find ourselves at a key moment where, as I often say, it is time to take out the camera. This happens once the Russell 2000 hits the 2021 high zone, a goal it has been aiming for for months. Until this level was reached, I maintained a calm and confident attitude in a clearly bullish context on Wall Street.
As I have said many times, I highly value A lasting decline in the US and, consequently, European stock markets was unlikely until the Russell 2000 index managed to reach these all-time highs. Remember that a few months ago, the rest of the major indices across the Atlantic had already exceeded these levels.
When I talk about take out the cameraI mean stop and carefully watch the market move while waiting to see if the bulls put a trading floor on the table. poker aces on Wall Street. This concept implies that the index which brings together small and medium-sized American businesses not only reaches its historic highs of 2021, but also manages to exceed them. and enter absolute free climbwhich is the most bullish technical situation in existence, which occurs when an asset is trading at levels never seen before.
Without this ace poker, let’s be careful: I still can’t visualize a stock market paradise by 2025. For this reason, last week I recommended that you take partial profits and reduce your exposure to the stock market, thus guaranteeing valuable liquidity, which ammunition of the future which we can use to take advantage of new market opportunities.
Actually, The extent of this resistance triggered a 5% decline in the Russell 2000.a correction which, if you followed my advice, you will surely have faced with greater peace of mind after making these adjustments to your portfolios.
This correction of the Russell 2000 seems completely normal to me and, for the moment, does not represent a source of concern. But what worries me is what is happening on the stock markets of the Old Continent, in particular the risk that A German locomotive derails. This fear would materialize if the DAX 40 lost the support of the 18,900 points. If this happens, it would be reasonable to anticipate another 5% drop before the bulls attempt to regain control.
The good news is that, if this correction finally occurs on the European stock markets, a clearer operational scenario would open up to take advantage of a possible bullish home stretch of the year, in the form of an end rally. of year. Currentlylet’s stay patient and wait to see if the market offers us this Christmas present, At that time, I may recommend buying stocks again with more energy. Patience.
