The 2nd quarter of 2009 is in the books. The stock market has staged a strong come back from the bottom that was formed in early March 2009. What’s amazing is the “V” type bottom that has formed. You don’t see a bottom like this very often. The Dow ran up against a little resistance on the daily chart at around 8900 forming a channel with a floor close to 8500, and now 8500 appears to be resistance. Further, it does not seem to want to trade with any conviction above the 200 day moving average. An indicator that most traders watch for conformation of trend. I’ve been expecting to see some sort of significant pull back before we can start to believe the Bulls are in charge. At this juncture, if we think the current high is going to hold then we would not be surprised by a pull back in the Dow to somewhere between 7700 and 7400 and we would expect to see this price sometime in early August 2009. But this market has not acted rationally since the sell signal was confirmed in January 2008. Therefore, we proceed with caution.
Return YTD as of 06/30/2009
The Highest U.S. Money Market Fund 1.98 %
The Average U.S. Lg. Growth Stock Fund 10.46 %
The Average U.S. Int. Government Bond Fund 1.58 %
We should be making regular contributions of new money back into the total stock market. The pile of money that we removed earlier is still sitting on the side. We will keep that there until we KNOW the bottom is in place. At which time we will begin to aggressively dollar cost average that pot of money back in to the total stock market.
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