Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Equity Markets to Track Higher in September Before Election Correction

By

The stock market continues to track the typical election year chart pattern.

PrintPRINT


Last week, however, the under-invested crowd got a break as the SPX snapped its six-week winning streak. This should have come as no surprise after the SPX's first attempt to travel above its April highs failed. As stated, it usually takes two, or even three, attempts before a successful upside breakout occurs.

Also, as anticipated, the pullback was shallow, indicating the bulls are still in control; and while the momentum has been lethargic, there are no clear-cut bearish divergences that typically occur at topping formations. Indeed, at a "big top" the Relative Strength Index (RSI) will diverge and fail to confirm new reaction highs in the broad averages.

Furthermore, the leading stocks continue to lead. Typically, if a top is forming, the leaders lag and the laggards lead and that is just not happening. All said, the picture looks pretty good with the stock market's daily internal energy level back to a full change. That puts the SPX in great position to vault above the 1420 – 1422 level and keep pushing higher.

As for my comments on gold last week, gold looks to have broken out to the upside, and in the process has traveled above its 200-day moving average. To me, this looks like the start of a move higher and not the end of a move. Coincident with gold's upside breakout, Credit Suisse penned a report on Freeport-McMoRan Copper & Gold (FCX) with a favorable rating. The report's byline reads, "The cheapest growth stock in our universe."

The call for this week: Hurricane Isaac blew into the Gulf, but is having little effect here in Tampa. Still, like a snow day up north, the schools are closed and the Republican National Convention is taking the day off. The stock market, however, is not as it continues to track the typical election year chart pattern, as can be seen in the chart below from the good folks at Bespoke. If the correlation continues to hold, the equity markets should track higher into the beginning of September before giving us a more substantial pre-election correction.



No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE