7/2/15
Making the turn
Happy Independence Day!
We enter the year’s second half with the flat market profile
solidly intact. There is an imperative need for our assets to prosper but this
market is not being very cooperative. The second quarter’s small loss broke a
string of nine straight quarterly gains for the S&P 500. For the year, the
US market and most averages are also flat. In June alone, we had a 2% drop in
the S&P 500.
The current levels of US stocks are low in the context of
the highs for 2015. The high mark for 2015 is 2130 on the S&P 500 and we
sit at about 2071 currently. This means the market is low compared to its range
in this tethered, flat market. Soon enough, we should stage a rally back to the
highs for this year. Indeed, prominent research provider Bespoke Investments
sites that for all periods where the market paused and dipped lower after seven
straight advances, the average gain for the following quarter was 7.5% for the
S&P 500!
It’s sensible to think an advance of that magnitude is unlikely.
However, good profits can be made and your assets can grow if
the market were to merely recover to its June highs. Many stocks in companies
with bright prospects are undervalued and present good opportunities.
The holiday weekend is clouded by concerns about the vote in
Greece for austerity. Conditions for investing in China are awful as their
market enters a bear market phase down more than 20% from its highs. Issues in
these two countries are chiefly being cited for the volatility you have noticed
in the DOW Jones average this week.
I’m eager to see how these situations play out. If I’m
right, this current selloff will set the stage for a good buying opportunity
beginning about the middle of this month.
