Summer Rally Ahead?
Principles of the Stock Market

Blog Subscription Form

  • Email Notifications

Have You Seen This?

Have You Seen This?

TECHNICAL VIEW.  Summer Rally Ahead Or Not? 


Now is the time for all good men and women to watch the key stock market indices very closely! 


We have a possible bottom in place (if it is a bottom I have to believe it’s a temporary one).  Yep, after basically falling out of bed for two months, from mid-May to mid-July, the stock market stopped going down a week and a half ago now.  We then rallied sharply based on an accumulation of propping up moves by all parts of the US government.  Then yesterday, we had the normal fall back, after any sharp move up.  Now things get interesting and critical.  Do we fall back and successfully retest and firm up those July 15th lows, setting the stage for further gains and a lasting late summer rally?  Or lapse into a sideways trading range, the other normal way for bear markets to correct themselves?  Or do we take out those lows and thus continue the stock market slump for, say, the rest of the summer?  Last I heard, #1 market guru of the past Joe Granville says that’s what’s ahead, more declines for the rest of the year. 


If we do lapse back into what I’ve predicted as a “rough and rocky summer” and thus suggested it’s time to get your vacations in, then thus those of you following my advice and reading this advisory from your summer beach place or mountain vacation, please just settle in for more swimming, golfing and fly fishing for trout.  Or whatever you like to do in the summer time (“when the living is easy”).  My son Brian, by the by, is certainly getting to know Iowa and the heat in the summer time as he’s stationed in Iowa as a field organizer preparing for the November general election.  He emails me:  “Meeting lots of Iowans.  Rural is rural.   There is definitely a different way of life here from the city.  Lots of cultural mix, county fairs.”  I say “Go Brian Go!  Live the dream!  Hey, wonder if you’ll come home to Boston with an Iowan girl on your arm; wouldn’t doubt it. 

Schwartz View:  Back to point, if we do hold above the July 15th lows and then rise above Wednesday’s closing highs, say of Dow 11,632.40 and S&P 500 1282.19, I’d suggest trading this rally.  We would then have in place a successful retest of the old lows, a lower low in place.  And also a higher high and thus enough technical evidence to buy (for a summer rally anyway).


Posted 07-25-2008 8:44 AM by Richard Schwartz