Hey, Ross here:
I hope you had a great long weekend. Welcome to the start of a new trading week.
Let’s begin by looking at the state of the current rally, and what I think is in store for this (shorter) trading week.
Chart of the Day
A quick way to see if a market is extended is to measure its distance from the 50-day moving average (red line on chart).
Above is a weekly chart of the Nasdaq index.
Notice how the 50-day line contains the move in both bull and bear markets. When the index strays too far above or below, price pulls back as it reverts to its mean.
For the Nasdaq, it tends to pull back when it gets more than 12% above its 50-day moving average.
And that’s where it is trading today.
The market is overbought.
And while it is possible to stay that way and continue higher, the more likely scenario is that we will see a 5-10% pullback in the indexes.
If this happens, I will be using it as a chance to buy top-performing stocks on pullbacks.
Insight of the Day
For select stocks, pullbacks are exactly the signal we’re waiting for
When the market pulls back, the bears are going to once again come out of the woodwork crying about how we’re all idiots for missing this “obvious” bull trap.
It’s tiresome and predictable. But you can bet at least some people will fall for it, which will deepen the pullback even further.
I’m not fazed.
In fact, when it comes to using my top-performing FIRE Pattern to spot high-potential stock setups…
We WANT to see a pullback happening…
In fact, the FIRE Pattern REQUIRES that a pullback happens before we get into a stock.
That’s why I’m actually even more excited about the opportunities I’m seeing now compared to last week…
And why I’m going LIVE right this second to show you all the opportunities this pattern is spotting right now.
And get ready to seize even more opportunities while others are worried about a “bull trap”.
Embrace the surge,
Editor, Stock Surge Daily