Coach Mark here.

There is a lot of negativity in the market. It is not the first time in the last couple of years that the market has been faced with heavy negative sentiment. It seems that we have been alternating between periods of euphoria and doom in a cycle for the last two years.

Do you know what has occurred in the transition between these periods of doom and euphoria? Consolidation patterns.

In July of 2022, in October of 2022, and December of 2022 we were facing negative sentiment, wearing downward price action and extreme fear readings on sentiment gauges. During each of these time periods a clear identifiable consolidation pattern formed at the end of the selling. These patterns formed amid the negativity and set the stage for sizeable rallies to occur.

We are not there today. We will not be there tomorrow. However, if you get caught up in the negativity you can miss pattern development that point to amazing opportunities. Let’s learn from 2022 and be on the lookout for those opportunities in coming weeks.

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Chart of the Day: S&P 500 July 2022 (SPY)

Markets can be very cooperative of telegraphing their next move as they were in July of 2022 after a period of intense selling pressure the previous months.

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