I tweeted on Tuesday night (4/16/24) that I feel the bulk of this recent market pullback is over. Before I continue, I want to remind everyone that I don’t regularly update this blog. I actively manage portfolios for clients and my investment levels vary. If you would like more regular updates and analysis, you can sign up to become an Educational Member.

1) Since last May, I’ve been positive on the markets. That’s when we started a new bull market powered by AI. I wrote about it on this blog and discussed it during this TV appearance.

2) After the amazing technicals in early November, I reiterated my bullish stance here.

3) Coming into this year, I discussed in my 2024 Preview that I was expecting less-than-average pullbacks this year. The average intra-year correction for the S&P 500 is approximately 14%. I am only expecting pullbacks in the 3-7% range this year.

4) In mid-March 2024, I wrote that I reduced my exposure and that I was “defensive over the near-term until we shake out some of the excess bullishness.” Since then, I feel this pullback has done that. For example, the CNN Fear and Greed Index has recently dropped from 78 down to 38. In addition, I’ve talked to many traders who experienced “mini blow-ups” over the past two weeks due to excessive leverage. You might laugh, but we live in such an impatient and fearful world that sentiment gets very negative, very quickly.

5) On Tuesday (4/16/24), I added exposure to some of the stronger relative strength growth stocks. Please keep in mind that when I say “the bulk of this recent pullback is over,” that doesn’t mean that we’ve bottomed and we’re going straight up. It just means that I’m not expecting significant downside from here. Of course, we can still chop around and back-and-fill over the near term. I just felt it was a good time to add exposure as we head into earnings season and due to the second half of April being historically positive.

I can be reached at: jfahmy@zorcapital.com.

Disclaimer: This information is issued solely for informational and educational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. None of the information contained on this blog constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. From time to time, the content creator or its affiliates may hold positions or other interests in securities mentioned on this blog. The stocks presented are not to be considered a recommendation to buy any stock. This material does not take into account your particular investment objectives. Investors should consult their own financial or investment adviser before trading or acting upon any information provided. Past performance is not indicative of future results.

I’ve been aggressively invested in many leading growth stocks since the two follow-through days and the Zweig Breadth Thrust we saw in early November 2023. I discussed three of the stocks on the IBD Podcast on November 1, 2023, and they have seen very strong gains since that date: NVDA +112.1% , UBER +75.8% , MSFT +21.7%. I also wrote about the bullish factors in these two blog posts in early November 2023: Four Reasons for a Year-End Rally and Another Thing Going for the Bulls.

I reduced my exposure this week for the following reasons:

1) After a strong run, there’s nothing wrong with locking in some profits.
2) There’s been 5 distribution days (days of institutional selling) on the Nasdaq Composite over the past two weeks.
3) Many sentiment measures are showing extremely high levels of bullishness.
4) The end of the quarter tends to see all sorts of shenanigans such as window dressing, profit taking, index rebalancing, portfolio rebalancing, and just overall volatility.
5) The S&P 500 hasn’t visited its 10-week moving average in a while. Who knows? Maybe some hawkish comments from the Fed might be an excuse for the market to pull back.

Please keep in mind that I still have core positions in stocks that I like until year-end and that I’m not turning bearish, just defensive. If the market grinds higher, I still have plenty of exposure, and if the market pulls back, I will look to put cash back to work in some of the relative strength growth leaders. In other words, I am bullish over the long-term, but defensive over the near-term until we shake out some of the excess bullishness. As always, have your own plan, know your timeframe, and stick to your own investment objectives.

I can be reached at: jfahmy@zorcapital.com.

Disclaimer: This information is issued solely for informational and educational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. None of the information contained on this blog constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. From time to time, the content creator or its affiliates may hold positions or other interests in securities mentioned on this blog. The stocks presented are not to be considered a recommendation to buy any stock. This material does not take into account your particular investment objectives. Investors should consult their own financial or investment adviser before trading or acting upon any information provided. Past performance is not indicative of future results.