Market Briefing For Monday, July 3
Fireworks fizzled repeatedly in the second quarter's final week. Ongoing and persistent efforts by portfolio managers to 'rotate' into supposedly attractive values, are primarily a tactic to sustain the overall primary uptrend that has persisted (at least superficially) throughout the year. In our view 'distribution' began under cover of a strong Dow and S&P from early March forward.
I've described this ongoing pattern thoroughly along-the-way; and explained why we called for the S&P 2430-50 area to be a likely topping-zone. At the same time I was warning that many of the 'heavy-lifters' (a narrow group leading a post-Trump market romp we projected from Election Day forward), were undergoing distribution, while many pundits cheer-leading so-called FANG stocks well after the heart of their strong rallies were already behind, likely were endeavoring to press them higher (while rotation transpired?).
In sum, the pattern evolves much as outlined; with oscillating volatility that has tried to keep the overall market structure intact, even as distribution has dominated the market 'under cover' of a strong S&P through the quarter. As regards our view that a period of erosion and decline is developing, sure. It gets forestalled because there is such nervousness out there; but sooner or later we anticipate a move to lower levels as outlined likely coming and in a sense already underway, albeit on a rotational basis. Daily action had wild oscillation we've thoroughly addressed all through the last week of the second Quarter. It was hardly different on Friday, with the market firming in the last hour; only to fall-away in the final few minutes.
This 'trap-door' effect under markets is indicative of the tension on the tape these days and at what may well be the inflection area we've described as likely during the June timeframe with stabilization 'efforts' only in late June and into early to mid-July, at best.
I'll explore things more on Monday with an update to this report, which may be a bit more than the brief summary of action; as it depends on news and other developments. Otherwise you know our concern about this market. |
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Disclosure: None.