Today was a good rally even if volume
still was low. The market has almost recovered to last
week's high on the 21st of June. If the market can break
through this will be a nice improvement and could assist
in laying the ground work for a rally in July. The S&P
closed almost at the high leaving a very bullish
candlestick. There are other good signs as well. The
Ultimate Oscillator continued to rise higher today as
did MACD. The slow stochastic broke the bear sign today
and indicates a move higher.
It's important to remember that a
rally of a couple of days does not make a new trend. It
is also important to remember that at no time during the
recent downturn did the market break the 1249 barrier
which marked the bottom of the March low, which is a
good sign. I am not indicating the market may move
higher overnight, but it does look more positive that
even if there is weakness over the next few sessions,
the market may be getting set for a rally into July. It
is interesting to note how few stocks made new lows
during the last few weeks despite so much doom and gloom
talk. Many stocks are still, I believe, overvalued and
did not fall enough. There is still a lot of strength in
the market. Here is McDonalds.
Here is another strong stock - YUM! Brands.
There are dozens of such stocks that have given back
very little so far in this downturn. Here is Johnson and
In previous market direction calls I have mentioned the
XLF which follows the financial sector and how important
it is for the financial sector to get out of its 6 month
bear market. While there isn't a lot of life in the
Financial Sector, the XLF might be indicating a possible
bottom for at least a while, in the Financial Sector.
While this still isn't good, the market might rally
higher if the financial sector would stop falling.
As investors tire of the Greek Debt Crisis, the US
Housing decline, the massive debt, debt ceiling, and
more, it's important to remember that markets don't
follow the present state of the economy. It is forward
looking. In the latest ongoing downturn, many stocks
failed to make new 52 week lows. With all the signs for
the past few sessions showing renewed strength, could
the market be preparing for a July rally?