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MARKET DIRECTION CALLS
August 2 2011 - Selling Intensifies
August 1 2011 - Bear Returns
July 28 2011 - Before The Open
July 27 2011 - Down But Are We Out?
July 20 2011 - Stock Market Volatility
July 18 2011 - Investors' Nervousness
July 15 2011 - Earnings VS Bleak Data
July 14 2011 - Below 1310
July 13 2011 - Ugly Looking Chart
July 12 2011 - Razor's Edge
July 8 2011 - Nasdaq Leads The Way
July 5 2011 - Expected Weakness
July 1 2011 - Overbought
Jun 28 2011 - July Rally?
Jun 27 2011 - Mixed Signals 
Jun 21 2011 - Bottom Or Bounce?
Jun 16 2011 - Raising Cash
Jun 15 2011 - More Downside To Come?
Jun 14 2011 - Bounce or Bottom?
Jun 12 2011 - Batten Down The Hatches
Jun 6 2011 - Bounce Sometime Soon?
Jun 2 2011 - Sell Signals and Warnings Everywhere
Jun 1 2011 - How Bad Could The Selling Get
Jun 1 2011 - Tread Carefully - Markets Remains Overvalued
May 31 2011 - Success - 100 Day Moving Average Tested
May 17 2011 - Be Careful Out There
Apri 18 2011 - Two Bears Compared
Apr 13 2011 - Why I Bought Puts Today
Apr 4 2011 - Breaking The February Highs
Mar 16 2011 - The Art Of Being Wrong
Mar 15 2011 - Market Remains Resilient
Mar 11 2011 - Trend Is Down
Feb 25 2011 - Trend Turning Bearish
Feb 11 2011 - Still Up - But Watch For June
Jan 3 2011 - Trend Remains Positive
 

MARKET DIRECTION CALL S&P 500

June 28 2011 - July Rally In The Works?

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.

S&P 500 chart - June 28 2011

 

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.

McDonalds Stock -3 months

Here is another strong stock - YUM! Brands.

YUM BRANDS STOCK - 3 month chart

There are dozens of such stocks that have given back very little so far in this downturn. Here is Johnson and Johnson.

Johnson and Johnson stock - 3 month chart

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.

XLF ETF - 3 months chart

SUMMARY

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? 

 

Disclaimer: There are considerable risks involved in all investment strategies. Trade at your own risk.
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