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There’s an uptick in the main inventory indices over the previous few weeks, which represents excellent news for buyers who’re lengthy the markets.
However, writing in Real Money lately, James “Rev Shark” Deporre, says it helps to dig under the surface and see exactly how to play an extended market.
Here’s how he put it:
“If the S&P 500 was a person inventory, then it might most likely be prudent to take some good points and await consolidation or a pullback earlier than changing into extra aggressive once more. But it’s an index that’s supposed to point general market circumstances, and it does a pretty poor job of doing that.”
“While the S&P 500 is prolonged, many particular person shares will not be. In reality, many small shares, development names and speculative favorites are simply turning up out of a months-long downtrend, and their charts look nothing in any respect like the S&P 500.”
Rev Shark says to disregard the specialists who rely on the main inventory indices charts to plot a path ahead. There’s a flawed assumption in that line of thought — that shares transfer in a extremely correlated vogue. .
“That isn’t the approach the market operates this 12 months. There has been fixed rotational motion with totally different teams main at totally different occasions and really deep corrections in sure market areas. It has actually been a market of shares fairly than a inventory market.”
Rev Shark isn’t shopping for the indices argument. He likes the buying and selling motion in lots of particular person shares and can keep bullish till that state of affairs shifts.
Get more trading strategies and investing insights from the contributors on Real Money.
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