I thought the blow off top would happen in 2020. January and February of 2020 started off super frothy. Then Covid came along delaying the party. But I’ve always held the idea (don’t ask why) that the era of “Big Fed” would end is some kind of 1999-2000 Nasdaq type blow off top - meaning a very large move at the end of a bull run in markets in a short period of time.
Microsoft, among other large growth company stocks, is beginning a parabolic move - potentially. If this moves straight up for another 1-3 weeks, we may have it. of course, anything can happen, and we sold this stock at 261 so for what that’s worth. Nonetheless, missing some gains notwithstanding, I find financial psychology interesting. And am curious what happens next. Here’s the chart I am referring to (note: a couple of clients own shares but our model portfolio sold MSFT recently):
MSFT daily chart via ThinkorSwim.
Possible outcomes:
keep on climbing daily forever (The Fed’s preferred choice, and may investors I’m sure)
A rapid blow off top ending sometime this summer
a pull back and climb (the way that most ensures continuous climbing IMO
Something else….
Note that other large company stock charts look similar (and not for no reason - some solid earnings reports were reported).
FYI - this is not a recommendation to buy or sell. I have no real idea what is going to happen and our buy/sell decisions are based on a combination of fundamentals and the chart. There are tax consequences to selling that need to be considered also. Consult with your advisor if you are not a client of ours ok?
Thanks!