Dan Sullivan Hasn’t Bought Into This Market Yet
Dan Sullivan, editor of The Chartist, believes the market has been under persistent accumulation but his models (obviously momentum-based) have not given an all-clear buy signal.
The longest pullback since the August lows lasted only four trading sessions, with the Dow losing less than 1%. What we have here is a market that just doesn’t want to go down, and yet our models continue to exhibit caution. On a scale of 1 to ten, ten being a Buy signal, they are registering an eight.
SMA Comment: There are many out there like Sullivan who have failed to pull the trigger and get back into the market. It is for this reason the market will likely end the year marginally higher than it is currently. The weakening dollar will provide some impetus to the upside. However, at some point the dollar weakness will cause trouble (i.e., higher oil prices sending up prices at the pump and hurting the consumer).
The election cycle just turned positive, however, substantial governmental fiscal stimulus and bailout money was squandered in the first couple of years of Obama’s presidency, therefore, the normally strong two year period preceding the next presidential election will likely be muted.