Stocks gained 4.1 % during the month of May. And since the March lows we have rallied about 38% off of our lows. The question is, does the market still have enough going power to continue higher before a really healthy pull back. The price action between the Bulls and Bears is becoming less and less directionless, leaving us in a range bound market. But according to the technicians we have not quite violated the uptrend. But Many market participants still anticipate healthy pull back before the market can continue higher. Others believe that there is too much money sitting on the sidelines that will keep the market higher into the summers ans money managers chase performance. What about the "Sell and May and go Away", it may be a bit more active this summer than historically so. Only time will tell. I personally think that this rally may still have some steam to go higher if the Dow can stay above 8200, but then again I am no fortune teller.
On this very topic, a blog that I follow discusses the current market actions vs a previous time in history. Here is the discussion:
"A little comparison between today and 1938. The market rallied 50% off it’s lows before pulling back 14% and then continuing higher. Currently we’ve rallied about 38% off the lows. Maybe we have one last upleg before the pullback that everyone on Wall Street is waiting for?"
Thanks for sharing Dominic. Looks like this morning just confirmed the strong legs of this rally and our upward bias. Now you have to be concerned that this type of violent energy could be seen on the pullback we will inevitably get.
ReplyDeleteAlso watch selling action in the dollar and treasuries which may become more of an issue for the US equities .
I'm looking to unload my copper/commodity call TCK into this rally which is up close to 50% and sell some covered calls on MTW position as it gapped up this morning.