Where Did Big “Mo” Go?

Momentum–the driver of fantastic increases in stock prices over the past two months, has taken flight – nowhere to be seen. Certainly, there has been leadership rotation. Tech has cooled and cyclical stocks, including energy, have taken over the leadership mantle. However, this new leadership is not overcoming the decline in everything else. The stock market looks like it is entering a trading range with no new catalyst to help it break out to new highs.  As usual, there is plenty to fret about.

As you may remember, mid-August through mid-October is seasonally the weakest period for the stock market. No trend is 100 percent, but this year looks set up to be true to the pattern. The Bull and his partners do not believe any setbacks will be severe, more likely just sloppy. After all, we’ve come a long way since the start of this year. A pause is to be expected.

In the meantime, there are encouraging signs. Cyclical stocks have been outperforming. Energy is making a comeback, yet the rest of the market is holding much of its recent gains. Do not let the volatility throw you off. Once we get through this period, we enter the historically strongest time for stocks and “Mo” will return. Stay steady my friends.

The Lonely Bull