Lance Roberts argues the recent market surge is a continuation of the bull trend, not a new secular breakout, and says investors should not chase it after the fast rebound. He sees a likely near-term pullback to support, but still higher prices over the next several weeks/months unless the Iran/energy situation worsens.
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This weekly market recap centered on the sharp rally in equities after the Iran/Strait of Hormuz scare and the subsequent drop in oil. Lance Roberts said his firm had already rotated back to full target equity exposure because the market reclaimed the 200-day moving average within a short time window, which in his framework is historically bullish. He stressed that the move was fueled by oversold conditions, high bearish sentiment, heavy short positioning, and a geopolitical catalyst that markets had begun pricing out as peace prospects improved. …
Tactically, the market looks extended after a violent rebound, so chasing here is poor risk/reward; a pullback to support is the better entry point. Near-term volatility likely hinges on Iran headlines, earnings, and whether the rally pauses to digest overbought conditions.
Over the next few weeks and months, the base case is a continued bull-trend resumption after consolidation, provided earnings hold and the Iran shock fades. If oil-driven demand weakness starts showing up in estimate cuts, a 10% to 15% correction becomes more likely before the next leg up.
Structurally, this is still an earnings-and-liquidity-driven bull market that can absorb shocks if the underlying trend in profits remains intact. The bigger long-run implication is that geopolitical dependence on the Persian Gulf may decline as buyers diversify supply chains and energy routes.
If you missed the rally, you should not chase prices here; wait for a pullback to support and work off the overbought condition.
Roberts explicitly says not to buy after the surge and to wait for a better entry.
The market is likely to provide another opportunity to invest capital after the current surge.
He expects a pullback and says the market will hand investors another entry point.
The recent rally was unusually fast and strong, with the Nasdaq up 13 straight days and the S&P up 12 straight days.
He cites streak statistics to support the notion that the move is exceptional and overextended.
What did you do while you were in the UK, and how was the trip overall?
He says the trip was great and was mainly to see his son and extended family. He describes staying at Lake Windermere in an old manor, walking into town, enjoying unusually good weather, and being entertained by frequent low-level Eurofighter flyovers.
What are you doing with exposure now that the market has moved back above the 200-day moving average?
He says they are now full offense. Because the market was below the 200-day moving average for less than four weeks, they began adding exposure when the market popped on Monday.
Are you buying the market right now, or only on a pullback?
He says they already bought, are back to full target weights, and would add more only on a pullback. He adds that if someone missed the rally, they should wait for better support rather than chase it here.
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