As has been the case for several weeks now, the broader US stock market continues to work its way higher into the late summer. The 13EMA/30SMA bullish signal from this past May was indeed correct and there are still two long standing targets on the SPY remaining to be hit (that being the noticeable gap on the weekly charts at 108.02 and the 50% retracement level at 108.765). Considering the typical seasonal strength we often see into the labor day weekend, it would not surprise me to see these targets hit over the coming few weeks. Once we are on the other side of the upcoming holiday (and hopefully those targets have been hit) all long side bets are off in my mind and I will be preparing in earnest for the upcoming fall. Having said that, there are still a few weeks ahead of us until that time and there are no 'sell' signals in place to speak of so I am still tilting towards the market moving higher in the short term.
It is interesting to see how both the Chinese stock market and the US government bond market are suggesting the equity rally may be running out of steam. The Chinese market broke first two years ago and while I don't see a 'crash' scenario just yet, I believe that market will lead the world in its direction again. For the record, I still do have on my short proxies in the US financial sector (long deep in-the-money GE puts & GS puts while being long TLT calls) and I will be more than happy to add to those positions on any serious breakdown as we head into the seasonally horrible time of the year (Sept. & Oct.)
That's all for this week,
Brian Beamish FCSI
The Canadian Rational Investor
the_rational_investor@yahoo.com
the-rational-investor.com
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