Better and Better

The Bull has been observing and writing for weeks now about the many positive divergences in the technical action in the stock market. Recently, 70% of stocks were showing positive money flows. This number has been getting steadily stronger. Selling bouts seem to be losing their punch as exhaustion sets in. After all, at some point, just about anyone wanting to sell probably has. Smart, patient investors have been buying bargains.

Tech stocks were the first to suffer at the beginning of this bear market. They have recently been leading a recovery; first in, first out! China was the first of the international markets to crack; it too looks to be irregularly recovering, same dynamic. The Bull and his partners do not know if this is the start to the recovery or just an adjustment within a downtrend. Time will tell. We are, however, optimistic.

Earnings and guidance from many companies this earnings season indicate that investors have overplayed their fears. Circumstances are challenging but hardly dire. If we are in or will experience a recession, it is likely to be mild. More of the traditional inventory correction variety rather than a collapse of activity; nothing to fear. Stay steady my friends.

El Toro Solo