Stuck in a massive downward pointing chanel, the US stock market (as measured through the SPY - The Standard & Poor's 500 Index's ETF) continues to grind through the summer. From the period of mid May through mid July, the SPY has lost roughly 20 points or about 15%. It puts the saying "sell in May and walk away" into perspective, doesn't it?
Regardles of the past we must be ever watchful for signs of what may come in the near future. Is there a significant bottom in the US stock market? No, we are no longer in a bull market and must therefore look at rallies as counter-trend at best. Is there a potential for a trade-able rally back into resistance (maybe near the May highs around $142.5)? Yes, counter trend rallies often take the market right back to test the previous pivot point and we are now starting to head into a seasonally good time of year for the stock market. For the next three months the market may have the wind at its back.
Lastly, this week I ought to bring back to mind the idea that energy prices are topping out. While just weeks ago the idea that energy prices were going to go down seemed outlandish, that notion is gaining ground in the marketplace. An earnest drop in energy prices is all the market needs to justify that counter trend rally I'm looking for. Read my special report (Opportunities In Options - Is it time to start building a short position in energy?) at http://www.the-rational-investor.com
that's all for this week,
Brian Beamish FCSI
the-rational-investor.com
the_rational_investor@yahoo.com
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