The S&P 500, despite the excitement over the post-Brexit monetary easing (BOE stimulus plus corporate tax benefits, along with US fed hold-off on rate rises, again), has not yet taken out 2 significant levels. Until old highs are taken out, it is still a consolidating market. First, it needs to take out the last high which lies just under 2120. Next, it needs to take out 2130 – which was last spring’s all-time high for the index. Meanwhile, the index flirted on the downside with a break of 2000 after declining from the Brexit vote. The decline took out the prior low of 2030-ish. So we have no higher highs, and the last low was lower than the prior low. I’ve notated all of this stuff on the chart below.
Meanwhile, back at the ranch…the defensive sectors Gold, TLT and XLU are rocking to new heights.
If things are so good, why are these defensive sectors moving up?
Take advantage of opportunities
I did take advantage of the Brexit selloff by cashing in – profitably- on my Inverse ETF’s, and then buying into some panic-priced equities. However, given the failures of the market to meet my criteria for true bull market conditions–as noted above–I retain a certain level of scepticism as to how long this party will last. For that reason, we’re still almost 25% cash in our equity platform. There may be many more price swings over the coming months to trade – this market remains guilty of a continuation of a sideways consolidation pattern until proven otherwise.
Regular readers know that I am a monthly guest on BNN’s MarketCall shows. BNN has asked me to team up with my Associate, Craig Aucoin on a special MarketCall episode on July 13th . The show airs at 6:00pm. Craig is the resident Fundamental Analyst here at ValueTrend. ValueTrend is unique in that we separate the two disciplines of Technical and Fundamental Analysis. Stocks are reviewed independently by each analyst, without interference or influence. Thus, if I pass a stock technically, Craig must then review the stock independently by using his quantitative and qualitative methodology. Only if a stock passes both of our analytics will it go onto our approved list.
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