Topping patterns in the market

Weekly Market Update for July 7, 2023, from DeWayne Hall: Are we seeing a topping pattern in the short-term?

U.S. equities still appear to be in a topping pattern in the short-term (one to three months). Hey, there’s no shame in stocks taking a breather, especially after their movement in the first half of ’23. 

But as we’ve said, reversals are a process and take some time to develop and complete. The exact timeframe for a rollover is known only in hindsight, so predicting it can be a useless endeavor. Gun to our head, we’d say we’re in the middle innings of this topping pattern, but that’s strictly a guess. Stocks could rally even further from here as the FOMO crowd joins the fun driving us from greed to euphoria to eventually over the cliff. 

Realize that while this topping pattern plays out (and the market dances around, teasing and taunting us both ways before it eventually exhausts), both long and short trades carry heightened risk. While we monitor, we’re playing small ball on both the long and short sides, maintaining tight stops and healthy cash levels. 


The views expressed represent the opinion of Good Life Asset Strategies, LLC. The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and nonproprietary sources that have not been independently verified for accuracy or completeness.