Stocks Bear Market Not Finished

y: Donald_W_Dony
Stock-Markets

Best Financial Markets Analysis ArticleThe aggressive rally which propelled the S&P 500 upward 35% from March to June appears to be only half of the bigger picture. Long-term models for the index indicate that the S&P 500 trades on an approximate 7-8 month cycle. The complete movement is from March to October. July represents the mid-point of the cycle.

Technical evidence would suggest that the next four months should produce a downward bias on the big index.Once the S&P 500 breaks down to 890, then the present rally has stopped and the expected downward drift to October has begun. The first level of underlying support is at 800. The second is at 740.

Bottom line: Models would suggest that the bear market is not completely finished. There is an increased probability of downward pressure building over the next four months. Investment approach: Longer-term investors may wish to wait for the correction to unfold before adding new long positions. As most stocks and sectors follow the general path of the underlying index, there is a greater likelihood of obtaining better pricing by October.

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By Donald W. Dony, FCSI, MFTA