The market faced a number of headwinds in May – seasonality (“sell in May and go away”), the Presidential Election Cycle (now in its second year where since 1934 the average decline has been 21%) and an aging bull market (more than 5 years old; not many have lasted as long). Traders couldn’t be blamed for thinking that the extremist takeover of Iraq, one of the world’s largest oil producers, which started about three weeks ago might be a catalyst for a market correction. However, instead of rushing for the exit doors investors continued to pour money into US equities in June, especially the stock of small- and mid-cap companies. The market averages we track gained between 5.2% for the Russell 2000 and 0.7% for the Dow Industrial Average. My newsletter runs timing models for the benchmarks charted above – all remained on buy signals throughout June.
♦ Please note that my readings will change without notice, so please don’t buy or sell solely based on anything you read in this blog. ♦