A Rare Stock Market Signal Just Flashed for the 9th Time Since 1950.
The First 8 All Ended the Same Way
Quick Read – Goldman Sachs identified a rare market signal where momentum (Z-score) and risk appetite indicator (RAI) both rose above a heated level—a combination seen only a handful of times in decades that historically preceded capped upside and increased volatility, though not guaranteed bear markets. – Investors should not use momentum-appetite signals to time market peaks or make drastic portfolio moves, but rather view overheated conditions as a gentle checkpoint to selectively take profits on surging stocks while maintaining long-term positions. – The analyst who called NVIDIA in 2010 just named his top 10 AI stocks. Get them here FREE. It’s quite tempting for new investors to want to track the market’s current behavior while looking for patterns in the past to try to get a feel for how things could go in the future.
Of course, there are so many technical moves, patterns, and streaks that tend to pave the way for a certain behavior to follow shortly after. Whether we’re talking about recession indicators, such as the inversion of the yield curve, or other patterns that have a track record that might not be good enough to be remarked upon, I do think that investors should treat such moves as interesting food for thought and as less of a crystal ball for what to do next with their stocks or portfolio. At the end of the day, time in the stock market beats timing the stock market.