Stocks End Week Lower As Greek Drama Continues
Stocks opened higher but closed lower last week after the latest proposal from Greece was rejected and a slew of historic Supreme Court rulings were announced. Stocks opened higher after Greece announced a new proposal to appease their creditors. The deal was quickly rejected and stocks turned lower after Germany and other European countries said the deal was not satisfactory. The two big standout losers last week were the Utilities ($XLU) and the Transports ($IYT). Both of these important areas of the market are in correction territory (defined by a decline of >10%-19.9% from a recent high) sliced below key levels of support last week. This negative action bodes poorly for both Main Street and Wall Street and it will be very interesting to see how the incoming “data” is affected over the next few months. At this point, we do not expect the Fed to raise rates until the “data” improves markedly which means the easy money trade remains alive and well for now.
Monday-Wednesday’s Action: Stocks Rally On Greek Proposal
Thursday-Friday’s Action: Stocks Fall As Greek Drama Continues
Market Outlook: The Central Bank Put Is Alive And Well
Remember, in bull markets surprises happen to the upside. This has been our primary thesis since the end of 2012. We would be remiss not to note that this very strong bull market is aging (celebrated its 6th anniversary in March 2015) and the last two major bull markets ended shortly after their 5th anniversary; 1994-2000 & 2002-Oct 2007). To be clear, the central bank put is very strong and until material damage occurs, the stock market deserves the longer-term bullish benefit of the doubt. As always, keep your losses small and never argue with the tape. If you want exact entry and exit points in leading stocks, or access more of Adam’s commentary/thoughts on the market. Consider joining SarhanCapital.com.