Featured Trades: (SPX)
1) The Summer Rally is Here. Now that we are above the 200 day moving average, it looks like our summer rally has begun. But don’t expect too much. After delivering a neat triple bottom at 1,040, the S&P 500 has been grinding up in a low volume rally, complaining and protesting every step of the way. I warned you that something like this was coming your way (click here for my piece on the ‘right shoulder’). I also gave you advance notice of the lead sector, with NASDAQ, delivering its best five day run in 11 months (click here for ‘Get Ready to Load the Boat With Technology Stocks’ ). It looks like the first target is 1,040, where it hits a traffic jam at the January top, a right shoulder June/July top, and the 50 day moving average. Why is the market rallying at all, you may ask, when the economy is downshifting from a 5% to a 1.5% GDP growth rate? Blame zero interest rates, which enable many models to overvalue stocks. Shares have also become oversold following a nearly two month correction. Even dead cats will bounce when dropped from a great enough height. (Apologies in advance to my feline loving friends). I should point out that technical analyst to the stars, Charles Nenner, pegged this rally to the day in his interview with me on Hedge Fund Radio on June 7 (click here for the link to the show). If you are a nimble day trader, you might want to take a bite out of this. If you don’t want to worry a new hole in your stomach for 30 points, then sit back and enjoy your yacht at the south of France, your mansion in the Hamptons, or in my case, a beachside campsite at Lake Tahoe.