As we’ve discussed in the past, investors tend to use a 20% rise/decline from a market low/high to signal the start of a new bull/bear market. 🧭
While that method certainly has its downsides, it does tend to get a lot of attention. And right now, with the Nasdaq 100 rising over 20% from its October lows, investors are once again asking whether a new bull market has begun.
Now, skeptics will point to previous rallies, like in August, that reached 20% but ultimately continued lower. But the believers will point out that the current market environment is different.
For example, the Nasdaq 100’s 200-day moving average, often used to indicate its long-term trend, was falling in August. But since late last year, it’s flattened out and begun rising again. 📈
They suggest this indicates a much more supportive environment for stocks today than before. And as a result, they’re giving this signal more weight than they had in the past. ⚖️
Whether this is the start of a new bull market is a question being asked by investors all over the globe. And if prices continue to rise in the face of constant bad news, some hypothesize that the fear of missing out (FOMO) could take hold and push the market even higher. 😨
Only time will tell which side of the argument is correct. But the current environment definitely has some folks changing their tune. Just ask Michael Burry, who tweeted:
I was wrong to say sell.
— Cassandra B.C. (@michaeljburry) March 30, 2023
Guess this market has even the brightest investors unsure of what’s next. 🤷
As always, that’s the conversation happening today. We’ll leave it to you to analyze what you think is coming next.