The popular averages closed narrowly mixed on Monday, but well up from the morning lows. Existing home sales declined in June. Nevertheless, merger news helped support the stock market. Meanwhile, the prices of crude oil fell while 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.
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