CMG, AAON, ABNB In Focus; Should You Buy Breakouts In An Extended Market? | Summary and Q&A

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July 17, 2023
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Investor's Business Daily
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CMG, AAON, ABNB In Focus; Should You Buy Breakouts In An Extended Market?

TL;DR

Major indexes continue to rise, but caution should be exercised due to possible overextension in the short term.

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Questions & Answers

Q: Are the indexes too extended for short-term buying?

While the indexes show signs of overextension, there are still breakout opportunities to consider. It is recommended to evaluate individual stocks and opportunities before making any buying decisions.

Q: How can investors decide when to lock in profits or hold?

The decision to lock in profits or hold depends on individual time horizons and risk tolerance. Short-term traders may use moving averages like the 10-day or 21-day lines, while long-term traders may focus on the 50-day or 200-day lines. Additionally, monitoring market conditions and having a stop plan in place is crucial.

Q: How can investors navigate the upcoming earnings season?

Consider the impact of earnings reports on individual stocks and the broader market. Evaluate the expected moves in the options market and assess if you have enough cushion in your positions before holding through earnings.

Q: Should investors diversify their portfolios outside of tech stocks?

Yes, it can be beneficial to diversify outside of tech stocks to take advantage of other sectors, such as construction-related companies. In addition, monitoring overall market conditions is crucial, as a downturn could affect most stocks.

Summary & Key Takeaways

  • Major indexes, including the NASDAQ, S&P, and Dow, extended their gains on July 17th, with small caps (Russell 2000) leading the way.

  • The NASDAQ closed 8.1% above its 50-day moving average, indicating potential for a pullback, but further upside cannot be ruled out.

  • The market's overall trend seems to be changing, with improving breadth and the potential for more upside.

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