MarketSmith powers the charts in this video.
Will we see a big move at the beginning of the new year that will continue the trend of 2023 or will we see a quick shakeout to reduce the overly bullish sentiment? Both scenarios are equally possible. Both would offer great trading opportunities for the nimble.
A gap-and-go opening of the New Year will stir the speculative juices and lead to big moves in small and micro caps. Historically, small caps outperform significantly in the first three weeks of a new year. There are quite a few mid and large-cap stocks that are also potentially setting up for a breakout – NVDA, MSFT, WDAY, FOUR, SNOW, IOT, etc.
Many are super bullish on the first two-three weeks of the year but I don’t exclude a possible shakeout to keep the entreme exuberance in check. A quick pullback can offer much better risk-to-reward setups. Dip buyers are waiting behind every corner. They tend to do well in a bullish market environment because most stocks make higher lows and higher highs. The ones that get smoked during uptrends are the chasers who blindly leverage themselves in super-extended stocks.
I wish you a wonderful New Year full of joy and happiness. Knowledge and habits compound, both good and bad habits. As to trading, the next year should always be your best in terms of execution because if you are doing things right, you are becoming an incrementally better trader or investor every year.
Try my subscription service which includes a private Twitter feed with option and stock ideas, emails with concise market commentary, real-time market education, the Momentum 40 list of market leaders, and much more. See what subscribers say about my educational service.
Check out my free weekly email to get an idea of the content I share with members. How my ideas/alerts did.
I published a new trading book recently (2023). Check it out on Amazon.
Disclaimer: Everything I share is for educational and informational purposes only and it should not be considered financial advice. Read my full disclaimer here.
