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Market Outlook

The popular averages picked up from morning lows, but still saw it as down’s turn on Monday’s close amid light trading volume. Some American investors get shaken out when they learn of flare ups in faraway foreign disputes, while others think it wise to accept what appear to be presentations of bargains. The concern of course is that American personnel will be involved, like when I was sent to Vietnam. I don’t see that happening in either Ukraine or the Israeli-Palestinian conflict. Meanwhile, the prices of crude oil and gold rose on Monday.

   Above is my 3-month chart of the S&P 500 exchange traded fund (SPY). It was soaring in February following a January pullback. After a new high was recorded in early April, another drop occurred as newsletter writers were again warning people of a bubble that could burst. That April drop beneath the 50-day moving average was quickly erased. This led to another rise to record highs. Money moving out of stocks and into bonds led to more tests of that moving average.

   This year we’ve repeatedly seen waves of retail money moving out of stocks and into bonds at the behest of bearish pied pipers. Then the pros start bottom feeding each time a bottom forms at the SPY’s 50-day moving average. That level was tested successfully again on May 20. It was a good sign.

   Baby Boomers, their elders and many money managers remain hesitant to commit to equities. That mountain of available funds continues as support for a stock market that keeps climbing a wall of worry.

DISCLAIMER: Our commentaries are provided as general information and not investment recommendations. You are responsible for your own investment decisions. Our opinions are based on historical research and data believed to be reliable. There is no guarantee that results will be profitable. We are not responsible for errors or omissions. We may hold positions in vehicles that are mentioned.

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