August 24, 2017

What to expect Tuesday

Short post tonight!

I apologize for the late post. I was sidetracked this afternoon for something that I thought would take minutes and of course it took hours. Murphy’s Law I suppose.  Anyway, back to the market.

The market rebounded today after the sharp sell-off yesterday. The advance was not much of a surprise as the bulls have used every short-term decline as an opportunity to load up. Moreover, seasonal winds were at the back of the bulls as the day prior to the Memorial Day holiday usually bullish.

However, the seasonal winds quickly change direction as we move into next week. Historically, when the S&P (SPY) is higher the trading day prior to the Memorial Day weekend, the large-cap indice struggles the following week, particularly on Tuesday. The S&P is lower over 70% of the time when the Friday before the long holiday weekend is positive. Not a encouraging stat over the short-term.  

After the short-term stint on the bears side the bulls quickly take over the reigns as the market enters the typically bullish beginning/end of the month transition. However, according to the Stock Trader’s Almanac, Memorial Day week has been lower 7 out of the last 11 years in the Dow. So be nimble.

I still think we are headed for a range-bound summer with slight expansion as the summer progresses. Enjoy the long weekend!

Overbought/Oversold levels for May 25, 2007

  • SPY –  51.1 (neutral)
  • DIA – 59.1 (neutral)
  • IWM – 53.8 (neutral)
  • QQQQ – 45.6 (neutral)
  • GLD –  34.9 (neutral)
  • OIH – 56.7 (neutral)

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