Here is the update daily S&P 500 chartWe are clearly in a downtrend at this point. The blue line is a basic trendline, just to mark that. Below, it can be seen that the commercials have gotten long this market.
As I have repeatedly told everyone, this does not mean run out and buy stocks. There is a seasonal down tendency into the fall from here. Also, the bond market has been in a down trend. These two things will act as a deterent to a rally from here.
However, with the commercial being long, we could see a bounce here. I think if it occurs, it will be a selling opportunity, for those who have not gotten out of the market yet. I still expect a big buy point to set up in the fall for stocks. There is no reason to get too excited about the long side yet, itleast until that trendline is broken.
This is the 10th instance in the month of June since 1985, that the commercials have been long. In 7 of the prior 9, the market went on to make a lower low in the fall, setting up the buy point. In the two exception years, where the market went straight up, the bond market was in a major uptrend at the time. The bond market is in a downtrend right now.
1 comment:
Great info. I exited my stock positions a week before the sell-off. It was pure luck, and I did it because I know we are heading into a recession, and one day in the next few months the earnings will start coming in low, and by then it's too late for me to get out.
I wish I knew how to make money on the small moves. For now, I am glad being 100% cash at over 5%, and looking for a GLD opportunity. I still think GLD might go lower.
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