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Market Rally Next Week?

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    September 1, 2013

    The U.S. market has been down 16 of the last 22 days, the Dow down 850 points since its August 2 peak. That has the major indexes oversold beneath their short-term moving averages to a degree that could well bring a short-term rally attempt off the oversold condition.


    And we are in the ‘monthly strength period’, which consists of the last two days of the month through the first four days of the following month. It’s often a positive period (except in bear markets) as extra chunks of money flow automatically into the market around month ends.

    It didn’t get off to an impressive start over the last two days, but that could have been due to the nervousness over the Syria situation going into the long-weekend.

    If a rally does begin, buy into it on the expectation that another pullback has ended, or sell into it on expectation of still lower prices ahead?

    That will be the next big decision for investors.

    Other Voices:

    Financial Times: It’s easy to look at the swings in asset prices this month and reflect that they were largely a function of absent investors and understaffed dealer desks. In thin illiquid markets, prices can easily jump around and, reflecting this development, we have seen equity and interest rate volatility jump back to heights they reached in June. Once the Labor day long weekend is negotiated, investors and dealers will once more become fully engaged with markets but, as September gets under way, a sense of trepidation will only increase.”

    MarketWatch“The meager increase in consumer spending in July has quashed any optimism generated by faster second-quarter U.S. growth. . . . . A handful of Wall Street firms chopped their growth targets for gross domestic product in the third quarter after the government reported Friday morning that spending rose a scant 0.1% in July. . . RBS slashed its prediction for GDP growth to an annualized rate of 1.5% from 2%; Macroeconomic Advisers cut its projection to 1.6% from 1.8%; Barclays trimmed its forecast to 1.6% from 1.9%.”

    Barron’s cover today: ‘THE BULL’S IN CHARGE’.

    Barron’s, Vito Racanelli“Fall Market Forecast Looks Sunny. With the economy growing and earnings on the rise, stocks could head higher in coming months. Market strategists like technology and industrials, but not utilities. Who’s afraid of the Fed?”

    AAII Investor Sentiment Survey: Bullish: 33.5% up 4.6; Bearish: 30.7% down 12.1. 

    To read my weekend newspaper column click here:   Was the Second Quarter The Peak for the U.S. Economy

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    Images: Flickr (licence attribution)

    About The Author – Sy Harding, Street Smart Report

    Sy Harding publishes the financial website Street Smart Report Online and a free daily Internet blog at Sy’s Free Blog. In 1999 he authored Riding The Bear – How To Prosper In the Coming Bear Market. His latest book is Beat the Market the Easy Way! – Proven Seasonal Strategies Double Market’s Performance!

    It includes our research and analysis on the economy and markets, and provides charts and buy and sell signals on the major market indexes, sectors, bonds, gold, individual stocks and etf’s, including short-sales and ‘inverse’ etf’s.

    It provides two model portfolios as guides. One is based on ourSeasonal Timing Strategy, one on our Market-Timing Strategy.

    In depth updates are provided every Wednesday, with interim ‘hotline’ updates every time we make a trade. An 8-page traditional newsletter Street Smart Report is provided on the website every 3 weeks, in pdf format for viewing or printing out.

    There is the Street Smart School of online technical analysis ‘seminars’,commentaries to keep you ‘street smart’ about Wall Street, and much more.