Time to Start Taking Profits With Most Good News Already Priced in?
Investors are currently grappling with a dilemma with markets at a crossroads: should they maintain bullish bets or step to the sidelines, anticipating a correction?
Nvidia (NASDAQ:NVDA) is a prime example of this scenario. Despite expectations for a deep retracement, the company swiftly achieved a $2 trillion market value in just nine months.
The chipmaker grew at a staggering speed, outpacing both Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT).
This remarkable growth is attributed to the surging demand for chips, particularly in the field of generative artificial intelligence, where Nvidia emerged as a market leader.
So, investors are currently questioning whether the recent market rally toward all-time highs will continue or come to an end.
Therefore, in this piece, we will talk about three indicators that can help investors make a decision.
In retrospect, identifying the end of a trend seems straightforward, but in real-time, it's a complex task. The frequent occurrences of false breakouts and misleading market movements contribute to the intricacy.
Despite the allure of markets making new all-time highs, there's uncertainty in the air: a trend-change is imminent after an extended uptrend.
We have recently seen S&P 500, Dow Jones Industrial Average, and Nasdaq achieve all-time highs.
However, it's worth noting that with each new high, fewer stocks are actively contributing to the ascent, signaling potential cautionary signs amid the prevailing sea of green.
The ratio of high beta vs. low volatility stocks this week was at its lowest level since mid-January 2024.
Compared to the S&P 500, the ratio created a bearish divergence in favor of low-volatility stocks. Specifically, if we look at previous divergences, they
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