Ep. 294 Keep Calm And Trade On: Measuring Post-Election Market Sentiment
Investing With IBD
Deep Dive
Why did the market react so strongly to the election outcome?
The market reacted strongly due to the resolution of uncertainty, which was widely seen as a positive catalyst. Additionally, sectors favorable under a Trump administration, such as financials and energy, saw significant gains, driving broad-based rallies.
What challenges does the market face post-election?
The market faces challenges such as potential exhaustion of the initial rally, lack of a meaningful corrective phase before the election, and signs of waning momentum in global markets like Europe and Japan.
How does Katie Stockton view the current market sentiment?
Katie Stockton views the current market sentiment as fragile due to overbought conditions and a peak in the fear and greed index in October. This suggests limited upside potential and increased caution if breakdowns occur.
What is Katie Stockton's stance on the Russell 2000 index?
Katie Stockton believes the Russell 2000's strong move may be overdone in the short term and anticipates some digestion or retracement. She suggests waiting for confirmation before chasing the rally.
How does Katie Stockton use the cloud model in her analysis?
The cloud model is used as a gauge of the prevailing trend and support levels. It helps identify areas of potential buying pressure and is combined with other indicators to assess the market's health and momentum.
What does the DeMarc indicator suggest about Treasury yields and the dollar?
The DeMarc indicator suggests that the recent explosive moves in Treasury yields and the dollar are overdone and could lead to retracements. This is based on the 13 counts indicating trend exhaustion.
What is Katie Stockton's view on gold?
Katie Stockton sees gold as having strong long-term momentum but currently in a consolidation phase. She expects healthy consolidation before any further upside and is looking for buying opportunities after this phase.
How does Katie Stockton assess the energy sector?
Katie Stockton views the energy sector as range-bound with short-term backing and filling. While there are occasional short-term trades, the sector's relative performance remains weak, making it less attractive for long-term exposure.
What is Katie Stockton's take on NVIDIA and semiconductors?
Katie Stockton sees NVIDIA and semiconductors as having strong secular trends but notes signs of upside exhaustion on the monthly chart. She expects limited upside in the coming months but remains open to further gains if breakouts are confirmed.
How does Katie Stockton handle gaps up in stock prices?
Katie Stockton advises caution with gaps up, especially after strong up moves, as they can be exhaustive. She recommends waiting for confirmation of breakouts and using the gap itself as a stop-loss level for managing risk.
- Market reacted positively to the election results, showing a broad-based rally across equities, treasuries, and crypto.
- The quick resolution of the election may have contributed to the market's positive response.
- The rally's sustainability is questioned due to the lack of a meaningful corrective phase before the election.
Shownotes Transcript