This Is Not The Time To Chase The Market

Having entered a seasonally weak period for stocks, we do not recommend to chase stocks any further. Also the presidential and the decennial cycles do not suggest, that it is the time to be brave. They both indicate weakness into October.

Furthermore we are seeing an increasing number of divergences. In both, the S&P 500 and the Nasdaq, recent highs were not confirmed anymore by higher momentum. In addition, the recent weakness in transport stocks is suspicious. While the Dow Jones industrial continues to make new highs. the Dow Jones Tranport is in correction mode since mid July. Such a divergence is often a warning signal.

While we do not expect the bull market to be over, the next couple of months could bring us a well deserved correction before we expect equities to start their final advance into early 2018.

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