As Labor Day approaches, the summer doldrums are almost over for another year. Junior stocks are usually hit the hardest during this seasonally weak time of year - and this year has been no exception. With regard to the broader market, as the diagram above suggests, we are still very well contained within a massive downward pointing channel that has been in place for the past nine months. Using the moving averages above, we can clearly see the SPY entered its bear phase last November (when the 13 week EMA crossed below the 30 week SMA). For simplicity, we will not get an outright 'buy' signal until the 13 week EMA crosses back above the 30 week SMA. As well, normal consolidations take 18 months to play out so I am not expecting too much out of the US stock market (and most world equity markets for that matter) for the next six months at the least.
Currently we are consolidating a 'dead-cat-bounce'. From the extreme lows seen in July, we have rallied back to the 50% level ($131.80) and have not done much since. Should the short term upward pointing channel (small blue lines) be broken, one ought to expect a test of the lows seen in July (A.). Should we consolidate and break higher, resistance should come in at the major downtrend line (B.).
That's all for this week,
Brian Beamish FCSI
the_rational_investor@yahoo.com
the-rational-investor.com
No comments:
Post a Comment