Monday, August 3, 2009

Market Indices Power Ahead In July

Market indices surged forward in July pushing the S&P index ahead more than 68 points or 7.4% while the industrials sported a gain of 724 points or 8.6%. Leading the surge were material stocks. The Basic Materials SPDR XLB) rose nearly 13% in the month. Every sector gained. How can any doubt that we are in a bull market?

Still however, I recommend caution. Using our methods, we exited the market in June having already earned 15%+ on our stocks and double that in our futures. We are now poised though to have some fun using options to minimize our risk but to potentially take advantage of any continued rally that is to come.


While the market forges ahead, there is no follow through with the size, or increasing volatility. Without this increase in size, I cannot be convinced that the market should continue on much longer. Of course, we are looking at monthly data so this data does not take into account the day-to-day euphoria that comes and goes. In the end, I am tactically playing for some continued rally but as the SP500 approaches 1030, I expect to be selling.

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