For anyone still struggling with a should-I-or-shouldn't-I decision over investing in the stock market, at least one widely followed prognosticator says it's time to wait.
As Richard Suttmeier, chief market strategist at ValuEngine.com, explains in the attached video, hopes that this is simply a three-week soft patch could fade if markets close out the week on a down note.
"Momentum has been over-bought for a very long time for all five major averages," Suttmeier says of the Dow Jones Industrials (^DJI), the S&P 500 (^GSPC), the Nasdaq Composite (^IXIC), the Dow Jones Transportation (^DJT) and the Russell 2000 (^RUT).
If that happens, he says, it will ''confirm a major top" in the markets was set on May 21st and 22nd (closing high and intraday high), and that a clear cut sell signal will be triggered.
"Instead of a melt-up that people are talking about, you could have a quarter-end or mid-year-end melt down," he cautions, pointing out the pain that awaits those who attempt to utilize a "buy the dips" strategy on the belief that this pullback will prove to be brief and shallow (like all the other false dips of the past 7 months).
It is worth noting that his full-year target levels for the Dow and S&P are comparably bearish, and predict 15% declines from current levels to 12,969 and 1348, respectively.
If we don't close down for the week, and trigger his sell signal, Suttmeier says he'll simply stay on guard for the same thing next week, conceding that it's not what people want to hear.
"It's much easier to pound the table at a bottom to buy, than it is to pound the table to sell when a top is forming because nobody wants to get out," he says.
- Dow Jones Industrials