U.S. indexes are flashing green all the way across the board. This market is headed in one direction.
But when it seems like everyone is on the same investing page, the contrarian in me says, "Get ready for a pullback."
Don't get me wrong – it's not necessarily smart to stand in the way of the market's prevailing narrative on the basis of a hunch: The trend is your friend.
But here's the bottom line: The pullback is coming, and if we move at the right time, we'll get a crack at some of the best prices we've seen in some weeks.
Here's how I know…
This Is the Story the Market Is Telling Me
The market is saying, not in so many words, that the combo of an incoming Trump administration and Republican control of both chambers of Congress is lending a shot in the arm.
The market is anticipating tax reduction, less regulation, infrastructure and defense spending, repatriation, and keeping manufacturing jobs here in the United States.
The market is reassured that the U.S. Federal Reserve and central banks worldwide are still backstopping the economy, and lastly, there's an expectation that the United States will take a tougher line on trading partners – especially China – although this hasn't "firmed up" yet.
This narrative has given the market a serious upward push: The Dow has hit 14 new all-time highs since the election.
Technical analysis tells us what to do with this narrative.
Here's What the Charts Are Saying
About the Author
Nationally recognized technical trader. Background in engineering, system designs, and risk reduction. 26 years in the markets.