As previously stated, the market briefly broke down in the early summer and has reversed course and headed higher. While I myself am not overly bullish, one must respect the price action and go with the trend for the time being. It is interesting to point out how the very simple 'investor' timing signal (13 EMA vs. 30 SMA) suggested the bear slide that began two years ago, ended in May. As well, both the 50% level and a large gap sit in the 108 area on the SPY. Quite often I find that these two technical indicators coincide so seeing this isn't too big of a surprise. Can we get to that target before the seasonally weak period (September and October are historically the worst performing months for stocks generally) kicks in? Only time will tell, but for the time being the market is pointing higher so enjoy the rally. Once we get past Labor Day, all bets are off and I would fully expect some sort of pull-back. Currently a 50% retracement of the up move from the March lows sits ([66.62 + 100.86]/2 = 83.74) in the 84 area and that shall be my target for any significant sell-off over the coming 2 1/2 months.
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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