As the market opened for trading yesterday, the Dow Jones Industrial Average stood at 12,727, down 165 points from a month ago. For all the daily volatility recently, the reality is that since early June the DJIA has traded in a relatively tight range between 12,500 and 12,950. It has also bumped up against, but failed to pierce, an important resistance level around 12,850-12,900. I view the market holding steady at these levels as a major positive given all of the negatives and uncertainly swirling around. Should we get through the summer, and head into the election, with the Dow remaining in the 12,000s, we could set things up for an end of the year rally.
It’s hard to look at the current market and call it either a Bull or a Bear. Maybe I’ll call it a Sheep, as the overall market seems to be simply following the dollar up and down, rather than moving according to any fundamentals. Correlation remains too high, with most asset classes moving up and down together rather than according to their relative merits. This continues a trend that began last year. That being said, until the market gives a clear signal one way or another, I intend to hold steady with my general investment strategy, making small changes here and there as general market conditions dictate.