All markets took the proverbial beating last week!
What’s worse is I don’t believe it is over yet. Volume picked up on all exchanges last week. The NASDAQ was down 678 points or 3.51%. It would not be surprising to me to see if it dropped somewhere between 18,000 and 18,360 before buyers arrive again.
The S&P 500 lost 144 points, or 2.41%. It would not be surprising to see it drop back somewhere between 5,750 and 5,780.
The Russell 2000 Small Cap index took a beating, losing 5% or 121 points. The Russell is so volatile, there is no telling where it will settle in. A GUESSTIMATE would be 2,150 and 2,250.
Where Does the Market Go From Here?
In my view, what we are experiencing right now is a pullback. However, this pullback could potentially be more severe than anticipated. One key reason is the behavior of the market leading up to the election: it continued to climb despite extremely light trading volume. This light volume suggests weaker support levels on the downside, which makes the market more vulnerable to sharper declines.
It’s important to remember that institutional investors often adjust their portfolios based on the political landscape, particularly in anticipation of changes in administration. A shift in the Oval Office can result in significant adjustments to investment strategies as institutions realign their holdings to reflect new policies and priorities.
This dynamic is one of the reasons I favor banking stocks at this juncture. Lower interest rates and the potential for deregulation could pave the way for increased profitability in the banking sector. While none of these policies are set in stone yet, and the eventual laws will depend on how they are crafted, such changes would likely trigger a rally in banking stocks.
In summary, although the market is experiencing a pullback, strategic sectors like banking may present opportunities, especially if policy shifts align with investor expectations.
Upstart
I frequently update the trading performance of Upstart, along with other stocks on my buy list, to share my insights on how they’re performing. If something significant or concerning arises, I make sure to point it out. Soon, for those who want continued updates, you’ll need to sign up for my site. Currently, it’s free and packed with knowledge that I believe can help you navigate the market effectively. Due to its high volatility, Upstart currently receives the lion’s share of attention.
Regarding Upstart’s performance, while the stock ended the week down, it traded relatively well overall. It appears that support is starting to form in the mid-$60s range, suggesting some stabilization. However, I want to emphasize that any significant change in market conditions could have a substantial impact—either positively or negatively—on the stock’s price. For now, market conditions remain positive, but a shift in sentiment or broader economic factors could swing the momentum in either direction.
This stock is not for the faint of heart. If you cannot handle large market swings or are not an aggressive investor, it’s best to avoid Upstart. Its inherent volatility demands a high-risk tolerance and a strategic approach. Stay tuned for more updates and insights, and consider signing up to ensure you don’t miss valuable information about Upstart and other stocks on my radar.
Upstart Holdings (UPST) has shown notable trading activity this past week, with the stock declining by 13% but finding support in the mid-$60 range. Here’s a technical breakdown of its recent trading behavior:
Support and Resistance Levels: The stock appears to be consolidating around the mid-$60 range, which suggests a potential floor. This range is aligned with key support levels identified through moving averages and past trading data. UPST Technical Analysis (UPST) – Investing.com, Technical Analysis of Upstart Holdings, Inc. (NASDAQ:UPST) — TradingView
Volume Analysis: The trading volume has tapered off compared to its daily average, a sign that sellers may be losing momentum. Low volume during a price stabilization phase can indicate a potential bottoming out. Upstart Stock Price — UPST Chart — TradingView
Momentum Indicators: Key technical indicators, including the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD), show bullish tendencies. The RSI is near 63, signaling healthy momentum without being overbought, while the MACD suggests a buying opportunity as the stock regains some traction. This is by no means a reason to buy it now as the market consolidates. UPST Technical Analysis (UPST) – Investing.com.
Outlook: The broader trend remains cautiously optimistic, with technical ratings pointing toward a “Buy” or “Strong Buy” in the short to medium term. However, the stock’s high volatility, with a beta of 4.75, suggests significant price swings, which should be factored into any trading strategy. Technical Analysis of Upstart Holdings, Inc. (NASDAQ:UPST) — TradingView.
Given the above, UPST may be positioned for a recovery if it maintains support near current levels and sees increased trading volume during upward price movements. However, the stock’s trajectory will remain heavily influenced by broader market conditions and investor sentiment, particularly regarding the tech and AI sectors.
With a significant gap before the next earnings season and the market undergoing a general pullback, it’s prudent to exercise caution. Current conditions suggest a wait-and-see approach might be the most appropriate strategy, as the market continues to exhibit volatility and weakness. Monitoring key technical levels, broader sector performance, and overall market trends will be essential to gauge the right entry point moving forward.