The green shoots we were seeing over the past two weeks have now been aborted. Money flows had turned positive and there were obvious signs of bargain hunting.
News events simply overwhelmed the budding optimism.
So now we are again back in the same trading range that has been established since the beginning of the year. At present it seems most likely that the major averages will approach the bottom of that range once again.
Year-end and the beginning of a new one have been typically strong periods for stocks. This is usually because pension contributions, 401(k) matches, year-end bonuses, and corporate buy-backs all tend to occur during these months. Typically, this new money is invested. We’ll see how this all balances out; concerning news versus fresh money. Most likely the bottom of the trading range holds; we are near.
We predicted early this year that markets could be in a trading range for quite some time. That has certainly come to pass. There are good ways to manage through this kind of period; refocus on new winners, opportunistically upgrade holdings, seek more income, and don’t panic. No need to get discouraged at the bottom of the range or get too excited after runs.
The long game becomes all important.
Stay steady, my friends.
The Lonely Bull