24 Jul 2021, 15:23

Last week’s note-worthy event was Monday’s 700-pointer drop on the Dow Jones Industrial Average due to reports of new Covid-19 cases which could affect economic growth going forward. Even though it was a larger-than-normal drop, it created an opportunity for us. If you had followed our report last week, we identified the 50 Day Moving Average (which is the green line in the chart) as the critical testing point for the S&P 500 to rebound. True to our anticipation, the index made a strong bounce and made a new all-time high.

We took the opportunity to enter a few stocks last week, after the drop and were rewarded by some strong performance. Fortunately, we did not panic and sell away our stocks during the drop as we did not see large-scaled selling pressure amongst the institutional investors. This gave us the confidence that it was a just a minor correction and the index could continue moving up again.