Here’s Why The Stock Market Rally May Only Be Starting

This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me.

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September 7 – Stock mentions SPY, IWM, VIX

Listen to my podcast for the week of September 9:

S&P 500 (SPY)

The S&P 500 broke above a critical level of resistance this past week, and now the question on everyone’s mind I’m sure, is what happens next? I believe that the market continues to rally. Premium content: The Trend For Stocks Has Turn Higher

The break out at 2,935 was pretty significant for many reasons. The first was how the index had to fight to get over that level of resistance, with at least three successive attempts. Another reason, we reclaimed the December uptrend, which posed as a second level of resistance. The index also took out resistance at 2,975, which immediately began to act as support, a strong level of support at that once reclaimed on Thursday. These are vital facts and can not be just glazed over. The stronger and more fierce resistance is on the way up, the stronger it is when acting as support.

It will no doubt set up a challenge of 3,000 early during the week of September 9.

S&P 500,

Also, the advance-decline has now made a new high, and the RSI is steadily trending higher. All signs of bullish momentum coming into the market.

S&P 500,

RUSSELL (IWM)

I know there is some worrying among some investors that the Russell is signaling trouble ahead. First off, I think that is about to change. The advance-decline line has also reached a new high, and the RSI is trending high. A sign that momentum is entering the small-caps.

I think that momentum will continue to build and help to get the index over resistance at 1,536.

rut

VIX

The VIX also fell to its lowest levels since the beginning of August to around 15. It seems that it could continue to decline towards 12.  That should also help to give the index a boost higher.

VIX

The S&P 500 is also currently trading around 16.5 times my 2020 earnings estimates of $180.17. Which is certainly not expensive based on historical trends.

All together, it makes me feel a whole better than I did last weekend.

Anyway, that is all for today.

-Mike

Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future results.

 

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