By Zach Scheidt
This post Buy or Sell? Your Retirement Crossroads Is Here appeared first on Daily Reckoning.
The stock market has moved sharply higher this week after a string of strong earnings reports.
That’s something you should get used to for the next few weeks because we’re now solidly in breakout mode for the S&P 500, and with earnings season not even halfway over, this trend could just be getting started.
Last week, we focused in on the market breaking out above this critical 2,800 level. But today, I want to go a little bit deeper into why this is so important.
As you’ll see, this critical level could decide the fate of your portfolio in the near-term.
Let’s get started!
When I first started investing, I thought people who looked at stock charts were nuts. I thought the only thing that mattered when it came to investing in stocks was what type of business the company was, whether or not it made money, and whether or not those profits were reliable and able to be grown.
In other words, I thought that how a stock was trading — or how the market was trading — really didn’t matter.
Boy was I wrong!
The thing I didn’t really consider is that the market is comprised of millions of people who are making decisions about whether or not to invest, and about where to invest their capital.
These people are human, which means they have all the same emotions that I do. They have greed when it comes to making as much as possible for their families. And they also have fear when it comes to losing what they have invested.
The market isn’t some arbitrary machine that spits out prices for stocks.
It’s a giant collection of human choices of whether to buy or sell. And humans act in predictable ways!
By looking at a chart of an individual stock — or looking at a chart of the market — we can see what kind of buy or sell decisions that these people have made. And that gives us some good information for predicting what people are going to do next.
I bring this up because right now, we’re at an important crossroads where people have a big decision to make with their money.
Do they:
A) Keep their money on the sidelines because they are worried about a trade war blowing up?
Or…
B) Invest their money in so many of the companies that are reporting great earnings growth?
If you’re faced with these two decisions, it’s not easy to decide which way to go.
But what if I tell you that today, the market is moving higher… In fact, that it’s quickly moving higher… That it just broke to the highest level since we first started talking about a trade war… And that you’re going to miss out if you don’t get in right now…
What would you do?
That’s the message investors are getting right now as the S&P breaks higher.
The higher the market trades over the next few weeks, the louder that message will be, and the more pressure these investors will have to buy.
That’s why watching charts and looking at where the market is trading really matters. Because it tells you where investors are feeling the most pain, and it helps us make a wise decision with when and how to invest our money.
Bottom line: We’re in the middle of a massive breakout right now. The market has been in a holding pattern for more than five months. As we break out of that pattern, and as companies report strong earnings, the next advance could be very quick and very powerful.
That’s why I recommend being heavily invested in today’s market — to take advantage of all of the panicked investors who are about to be scared of getting left behind.
Here’s to growing and protecting your wealth!
Zach Scheidt
Editor, The Daily Edge
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The post Buy or Sell? Your Retirement Crossroads Is Here appeared first on Daily Reckoning.
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