The bulls have been in control – unrelentingly so it seems. Stocks have made tremendous moves to the upside, and there has been little or no time to digest gains and consolidate. Just ahead of the jobs report, it appeared that there might be some of the needed digestion, but all that disappeared once the report was released. And although a number of charts are now looking technically improved and presenting better set-ups, we still feel the need for some consolidation. But, of course, the trend is your friend until it is not – and the trend has favored the Bulls.
Perhaps with this being summer and some of the earnings season hoopla behind us, things will quiet down – perhaps until just before Labor Day. Typically summer is quiet, but more volatility comes into the market in September and October. And while the G-20 meeting is more than a month away, it is still there in the back of our minds.
Our thoughts are that gold can go a bit higher, but we are not trusting financials – and expect that we will soon see weakness in energy and basic materials.
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