Stock Market Update (free)
Panic Drop didn't panic during the stock drop
The stock market sell-off that occurred over a four-week period, amounted to almost a 10% drop.
This decline, combined with the VIX spiking to levels reminiscent of past crises, created a momentary sense of panic.
The strength of the market’s bounce back has been incredible and has brought the market back 2% below its all time high. This rebound, coupled with the nature of the initial sell-off, felt like a sentiment-resetting event.
Let’s take a step back and consider the broader context: We’re still in a bull market, dating back to the lows of October 2022. Untill now there has only been one pullback in 2023 that has been greater than 10%. The recent market action, characterized by two large green candles, suggests a potential V-shaped recovery. Given this, I’m inclined to maintain my favourite stocks, which I’ve held since the bear market lows. This approach is based on the belief that we remain in a bull market.
There’s ongoing debate about the implications of the yield curve's recent movement, which some argue could foreshadow an economic recession. However, my strategy remains focused on price action and trend analysis, both of which still appear strong. All mayor moving averages are sloping up, indicating an uptrend continuation.
The sharp drop in sentiment we witnessed recently might be enought for the market to climb once again. Additionally, encouraging economic data—such as cooling inflation and resilient job numbers—has bolstered the narrative of a soft economic landing. This scenario, where rates might decrease without severe economic damage, is a favorable outcome for the market.
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🟩 Written by Timothy Assi, a popular investor on eToro.
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