S&P 500 Source: www.dailygraphs.com
The market correction which began in late April continues. Last week the major indexes pulled back slightly creating a short term inverse head and shoulders pattern. This is a bullish technical chart pattern but until the correction has run its course and moves above the upper red line (see chart) the market will likely continue its consolidation. This rest period is normal after a strong move off of the March 2009 low and giving long term investors a good buying opportunity. I suspect the trading volume to drop off as professional investors take their last minute vacations.
Yes, the mainstream news on the surface is pessimistic as the media is focused on all that can go wrong but I continue to see strong stocks building bases, earnings reports beating expectations and emerging stocks / indexes near new highs. Stay the course and invest in the pessimism because blue skies will appear once the black clouds disappear. You will likely be reward in the next 12-24 months for doing so.