The S&P 500 futures index, considered the alpha market in today's highly correlated financial market place, shifted its weekly direction lower on Friday, to close below a 3-week pennant and post a 1-month low settlement. While stocks do have a powerful bullish seasonal this time of year, climbing back into the spring range is proving more difficult than in past years. With an established pattern of lower highs going back to May – see chart -- stock market bulls find themselves in a vulnerable position.
Even a modest correction of the October rally would leave blue-chip stock indices both looking over the cliff’s edge, and being lower on the year once again. You can bet plenty of 401K and IRA holders are asking themselves is it worth it to sit tight? The answer to that question depends on how old you are. It also brings up the alternative, which is exit stocks now, and go into fixed income until the price pattern is a healthier one of higher lows as opposed to lower highs.
Trading is a risky endeavor and not suitable for all investor!
To see Jay Norris point out trade set-ups and signals in live markets during the U.S. day and evening sessions go to http://clovernest.com/LME.asp . Jay is the author of Mastering the Currency Market, McGraw-Hill, 2009.