Take a Break

Igor Manukhov - Nov 17, 2023

After a stellar rebound over the last two weeks, I would not be surprised if the market takes a break here. Do not expect anything bad. Continue to put funds to work on pullbacks.

November so far has been a blockbuster month. The stock market really liked those cooler CPI numbers and rallied ferociously. While I do believe that we are in the early innings of a new bull market, I would allow for some sort of small pullback or consolidation after such a big advance.

Using the trusted RSI indicator (bottom panel), the market appears to be overbought on the short term. As a refresher, readings near or above 70 are considered to be overbought and have served in the past as a good warning sign of a short term pullback (see orange circles for past occurrences).

I would not be surprised if the market pulled back to around 4300 points before resuming an uptrend. Because I do not expect anything really bad at this point, I would advise you to use a pullback (if it happens) to put funds to work, if you haven’t done so yet.