Check out the most recent: MarketShadows July 8 2012.
Watching the market is reminding us of Groundhog Day. In the past three years, the market sails up for the first half of the year and then deflates as the Fed’s quantitative easing money infusions end. This year, the Fed kept “Operation Twist” going, but is it enough to keep the stock market in an upward sloping trajectory?
Lee Adler noted that while he doesn’t try to forecast, he does try to identify trends and spot turning points. In his view, everything seems on the cusp right here. “Tightly range-bound markets are telling us that neither side has upper hand. The Fed is providing enough support to prevent big selloff, but not enough to drive a rally. Capital flight from the eurozone is driving the Treasury rally in this risk-off environment, with short-term sentiment against stocks and pro bonds again.” He sees little sign of range breakout either way.
This week, two of our chartists are short-term bullish – Lee Adler and Springheel Jack. One, Allan Harris, is “cautious” and treading lightly. The Market Shadows Virtual Portfolio is largely bullish, with mostly long positions, one short position (Wells Fargo), and sales of calls, which hedge against our stocks dropping in value. We are not yet ready to buy insurance for losses sparked by significant downturns, but we will if we see more weakness in equities, and our chartists turn more negative.