The market finally showed a vulnerable side this week with a sharp pullback on Monday and Tuesday. A corrective period at this stage would be perfectly normal because stocks were up sharply in October and November. We also saw several flag breakouts fail. These failures are not enough to affect the long-term trends
We have seen a pronounced shift over the last few weeks. ETFs that were lagging and in downtrends are breaking out and starting to lead, while ETFs that were leading a few months ago are correcting and lagging. Add ETFs that where already strong and leading to the mix, and we have the recipe for a broadening bull market in stocks.
The goal of this commentary is to cut through the day-to-day noise and focus on price action that actually matters. Noise can be in the form of news or random price fluctuations. Either way, we are often better off when we filter the noise and focus on what really matters. So what really matters? Trends …