For the third time since June, the Nasdaq and Nasdaq 100 ETF (QQQ) have found support and bounced off the 50-day simple moving average. In both prior cases, the indices gained sufficient momentum to quickly make new all-time highs. The softness in the leading FAANG names -- Facebook (FB) , Amazon (AMZN) , Apple (AAPL) , Netflix (NFLX) and Alphabet/Google (GOOG) , (GOOGL) -- was quickly forgotten and the uptrend continued.
In both prior situations, worries about trade wars were also quickly forgotten, the potential for higher interest rates was ignored and the primary focus was on strong economic growth. There was the usual outrage over President Trump, but that has become so common that the market doesn't even pay attention to it now.
What has been giving the bears some hope is softness in the FAANG name. There have been a couple bouts of rotation out of the big-cap technology names and into the more mundane growth stocks that drive the DJIA, but it hasn't persisted for long. What really helped the market in the past three days has been a big bounce in Apple after some fear that it might be impacted by tariffs on goods produced in China. That was quickly forgotten and the stock is back near its all-time highs.
Once again, the market is back to where it has been so many times since November 2016. The uptrend continues and the price action is positive. The bears will keep telling us that a major top is about to occur and there will be enough doubts to help create a "climbing a wall of worry" dynamic. The primary fear is fear of missing out, rather than fear of being caught in a reversal.
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With a market like this, the important thing is to not make it overcomplicated. The price action is positive and that is all that really matters. At some point the market will correct, but there is no reason to believe it will be on Friday. There will be plenty of time to react as conditions change.
The biggest negative right now is that the action in individual stocks has been much more mixed in September than it was in August. Stock pickers had a much easier time of it in August, as many small-caps gained momentum and made sustained moves. Recently, it has been choppier and the number of stocks that have had good follow-through has declined.
The most important thing right now is to appreciate the fact that the indices are still uptrending and the overall price action is positive. I will continue to look for stocks to buy and will try to ignore the pundits that tell us disaster awaits.
It is simplistic and trite, but the trend is our friend and that trend is positive.