As you can see from the video posted above, price is extended. Even though this latest bullish run is extremely strong and we could see price extended for another year or two. It is always important to look and see what could happen in the coming weeks and months.
One thing we can all agree on is, at this very moment the bulls are in control no argument about that. BUT we can make a case that a 600-1000 point drop wouldn't be horrible either. In the past when ever we get extended from our mean we see on average a 300 to 600 point drop. With volatility picking up in 2018 that number has doubled from about 600 points all the way up to 1200 points last year.
With earnings entering into the latter part of the season we could potentially see a correction once the majority of the companies report. Even though earning season has been better then many expected we are most likely going to enter into a slow period as we normally do. This will be the true test, once all the news around earnings dies down and hopefully we get a better handle on Covid-19 will we see investors continue to buy at all time highs are look to capture there gains and wait for the next correction to buy back in, this is the million dollar questions.
My outlook is still bullish at the moment but do think in the coming weeks and months we will see a correction, will it be another 1200 point sell off like last year? I do not think so due to the fact the FED is leaving interest rates low for the next year or two and they are more then willing to inject cash into the system. Once rates start to go back up we could see a price start to slow.
What are your thoughts? Comments down below on what you think the next 6 months will look like.