Market due for a pause,  caution is advised in short-term

The market is poised for a temporary break, and it is advisable to exercise caution in the short-term. Following an enjoyable holiday weekend and an impressive performance in the first half of the year, the market is currently displaying signs of extreme greed. This sentiment is evident everywhere, with a widespread confidence in the new rally. People are discussing stock picks at social gatherings, websites are inundated with daily stock recommendations, and there is a growing sense of optimism. To gauge market sentiment, we have been referring to the CNN Money Fear and Greed Index, which currently stands at 80, indicating extreme greed. As investors focused on long-term goals, it is important to remain informed and not succumb to short-term emotional trading. It is advisable to exercise caution and refrain from swinging for home runs when a single can win the game. Stay focused on the fundamentals and the long term vison.

What factors have changed recently? Has anyone had a chance to read the minutes from the Federal Reserve? The Fed has paused in their rate hikes, but with two more expected this year. Inflation is receding at a slower pace than anticipated, and the market will closely scrutinize the numbers released on Friday. While consumer confidence remains high, so does credit usage. The burden of credit card debt may eventually affect individuals negatively. The Nasdaq experienced a remarkable first half of the year, but it is not uncommon for it to experience a 20% decline at some point while still achieving overall success. Therefore, caution is advised.

Was the recent market run a bear rally? The market does not always move upward in a straight line. Typically never! It is crucial to continue investing, but focus on long-term opportunities and exercise great caution when considering short-term trends.  Even if we are in the new bull market,  being cautious can save you from short-term loses.  Many investors are currently enjoying an extended holiday weekend, and it would be wise to utilize this time for research and organizing your financial affairs. Avoid making impulsive decisions driven by the fear of missing out (FOMO). Effective risk management plays a significant role in becoming a prudent investor. Remember, a 50% loss in any investment requires a 100% return just to break even.

Maintain your focus on long-term objectives and remain steadfast in your approach.

Week 4- Start Investing: Independence Day!