Today the stock market staged one of those Monday rallies even though it started down a little in the morning. The reason stated by the media was that oil prices eased giving the market some added upside.
Well, we beg to differ with the media about the reason for the rally. Of course oil and gas have been going up without pause for several weeks now and at least here in Minnesota prices are 2.65.9 as I was coming home tonight. But if you recall during that same period that oil has gone up, the market was going up, too, daily fluctuations notwithstanding. The stock market is not reacting to the oil prices like they would have you believe.
In fact, today's rally was brought to you by "Monday" would be just as good an excuse since we have generally seen early month and early week strength just because it's a new beginning. We don't feel any particular compulsion to believe that if oil drops the market will rally, instead we think the opposite if at all. The market and the oil may have topped at the same time.
Another big headline today was the housing market and how prices have gone up a record amount in the past year. Meanwhile, Delta Air made an all time new low as it struggles to stay out of bankruptcy...
Today was just a little upside in an otherwise dull market. The top put in place in the first week of August remains our guide. If that is broken to the upside we will have to be patient again. For right now, we are extremely bearish and with today's rally, we had a great selling opportunity.
One big negative about today's rally was the low volume. The bulls need volume to sustain any type of advance. In the dog days of summer, that doesn't seem to be in the cards but we will see. Our position is CASH at least until October and then we will reassess.
Where are your investments going?
Dow Industrials: 10,634.38 +34.07
BGEIX: 12.00 (Gold was down hard and silver is under $7 again)
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