stock market
What year is this? 2007 or 2009
The S&P rallied from mid-March straight up and hit a high in June, then traded sideways looking like it wanted to break down but then rallied to a new high mid-July…sounds familiar? Well this is exactly what happened in 2007 in the S&P. Once we broke to a new high in July sub-prime finally caught up and we gave back 4 months of gains in 1 month. This familiarity had me go back and read my trading journals from 2007. Here is an excert from July 12th, 2007:
“Record close as markets FLY!!! Dow up 290 points (+2.09%) Dow, S&P, & Nasdaq are at record closes. Best percentage gain of the year. Retail sales and M&A spark the market rally….seems to have a short squeeze towards midday as markets surge faster. New money came into the market while investors had conviction. People don’t want cash positions as dollar weakens.”
Doesn’t that sound like July 23rd, 2009? Those who don’t know their history are doomed to repeat it. As the markets convincingly hit new highs on Thursday and Friday, I could not help the fact that we are still in a bear market. Yes, price pays, but there is no way I can go against my gut. I have been churning through charts trying to figure out why I can’t go with the rally. I started to ask myself what would really put me in the bull camp? I think it will have to be a fall/winter rally and not a summer one. Historically, August, September, and October are tough for the markets. So for the next 3 months, even if we do get that 25% upside to 1200, I will be playing it in chunks and not with true conviction. However, if we see a substantial break to the downside, I will trade it boldly.
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