The market's direction is little changed since the last blog entry. The S&P 500 index [the index I like to use as a proxy on the broader stock market] continues it's relentless march higher into the Labor day holiday. Long standing targets are now within arms reach as we have slowly moved up over the past few months. So much so that we are now within 40 points of reaching into the gap between 105 and 108 and very close to the 50% retracement level of this entire bear market slide.
The very simple, yet quite consistent, timing indicator (13EMA vs. 30SMA) flashed a bullish signal in May when the short term average crossed back above the longer term moving average. These averages are now quite comfortably bullish and any correction in the seasonally weak fall period ought to be considered as a correction and nothing more for the time being. While I fully expect the lows of last March to be tested again in earnest, I do not think that will happen for some time (mid to late 2010 at the earliest) as the above mentioned moving average indicator takes many weeks (if not months) to go from bullish back to bearish.
Having said that, I fully expect some sort of pull-back heading into September/October as these are historically the worst performing months for equities generally. It ought to be noted that the current stock market rally is now more than 100 days old which in itself is a rather rare occurrence. The people at chart-of-the-day recently put out a piece speaking to this point (link: http://www.chartoftheday.com/20090828.htm?T)...
Short term traders ought to still be looking for the market to move higher into the holiday weekend while long term investors ought to sit tight on currently holdings and wait for the next pullback if considering any additional purchases...
That's all for this week,
Brian Beamish FCSI
The Canadian Rational Investor
the_rational_investor@yahoo.com
the-rational-investor.com
No comments:
Post a Comment