What To Look For This Week

A monster rally is HIGHLY probable; traders will buy any dip.

Happy Monday to you all. Thank you again for following my newsletter. It’s a way for me share what I wish I knew years ago. And although this is a paid newsletter, any forwarding of this newsletter to finance friends is greatly appreciated!

Today’s newsletter kicks off the week with one thought: Traders and investors will buy any dip that happens. Be ready for a big push higher.

The Week Ahead - Feb 28, 2022

One thing I can say with 100% confidence is that price will change. It could go up, down or sideways. That I know for certain.

Now, as to what may happen, that’s where technicals come into play.

Bulls Squarely Back in Control

Traders will be buying any dip. Investors love these prices.

Recall, last week we finished a Japanese Candlestick known as a hammer, which is very bullish. Hammers represent sharp intraday or intra-week reversals, which have powerful psychological effects on market participants:

Not to mention, investors love these valuations relative to the last few years.

Price Reversed at Statistical Tails

According to John Bollinger, 87% of all price movement happens inside the tails

Last weeks move happened at the tail, so expect a reversion to the mean (higher):

Friday’s Move Was No Joke (Serious Breadth)

62.4% of all NYSE Traded Positive

On Friday, 2,170 stocks traded positive. On the NYSE there is about 3,473, so that’s 62.4% of stocks trading positive. Days like that often see higher prices after:

Not to mention, this indicator confirms the exodus of money from bond funds and into stocks (WSJ, February 21, 2022)

Fear Has Peaked, Confirming a Bottom

You want to buy once fear has peaked… We can see crystal clear fear in the VIX Index peaks on the news of Russia invading. And quickly declining Thursday into the open.

Final Thoughts

I’ll leave you with this infinite wisdom: price will change.

Just remember this week, outside of any “catastrophic” news….

• If we see a dip lower early in the week, expect extreme buying power to step in, because the market is still very oversold.

• If we see a rip higher to start the week, there might be no turning back. Enthusiasm and exuberance will pile in.

And some weird, totally messed up kinda way, I feel as though the market is pricing in a resolution to what’s happening in Ukraine; that there will be a ceasefire soon.

One can only hope 🙏