Plenty of sentiment remaining for a large rally into September in stocks.
Expect our greed index to match that of the fear index. Newton's laws don't change when it comes to the market: every action has an equal and opposite reaction. Plenty of upside left in stocks.
The harder the media tries to crush the economy into the election, the more money the Fed will inject into the system. And if good news materializes, stocks rally. It’s a win-win scenario. Stocks are headed to all time highs in every index by late August/early September. There is a ton of cash on the sidelines. Every dip is being bought. We crashed in March due to the amount of leverage that existed in the system. Major banks and hedge funds levering cash up to 20x capital. The average investor dumping stocks didn’t cause the DOW to collapse 11,000 points. Many of these big players have barely deployed any capital and are underexposed with just negative losses to show for the year. Expect a massive chase for Alpha the next 3 months. We stalled near expected resistance at double top SPX 3230. That will be broken soon enough.
Consolidation is in order. Expect a $17-19 trading range while some short covering occurs and short-term day traders are fleeced.
Crude holding above the 10 day moving average.
A pullback in gold miners was expect by our models and that's what we got. We urged members to avoid leverage this late in the major advancing cycle. We will know within 2-3 days if there is one last push coming in metals before a large profit-taking event occurs. Stay tuned - we may harvest profit if support is held by the miners.
It is possible the top for July is in for the miners. We will know shortly.
This shakeout and consolidation is close to an end. Earnings will most likely be a trigger for restaurant stocks to rally over the next two weeks. Shorts will look to cover the next 10 days as we close in on their release. Restaurant stocks were up all day until they were attacked by shorts, courtesy of the California governor shutting his state down at 3pm EST today. No large private gatherings, no gyms, no dining out, and no religious congregation.
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