MArket Finally Pulls back 06.13.14
MON-WEd: STOCKS Ease From Record Highs
THURS-FRI: Geopolitical Woes Hurt Stocks
Stocks fell in heavy volume on Thursday as geopolitical woes intensified and rumors spread that Iran would enter the mix to combat insurgents in Iraq. The market was dragged lower by many sectors, mainly weakness in transportation and small-cap stocks. Even with all the negative headlines it is impressive to see the S&P 500 only fall 0.6%. Stocks bounced on Friday as inflation measures remained at bay as producer prices fell in May and turmoil continued in Iraq. CNBC reported: “Al Qaeda-linked insurgents who overran large parts of the north of the country earlier this week also seized about $450 million during a bank heist, Mosul Mayor Athier Nujaifi told NBC News. That makes the Islamic State of Iraq and al-Sham (ISIS) the world’s richest terrorist group.” Lovely, I know.
MARKET OUTLOOK: Patience Is King
The long awaited pullback is finally upon us which is healthy because it gives the market a chance to digest its recent (and strong) gain. It also sets the stage for a new leg higher to commence. At this point, it is important to analyze the health of the pullback before making another move. Keep in mind that this bull market is aging (turned 5 in March 2014 and the last two major bull markets ended shortly after their 5th anniversary; 1994-March 2000 & Oct 2002-Oct 2007) but until we see signs of distribution (heavy selling) the market deserves the bullish benefit of the doubt. As always, keep your losses small and never argue with the tape.
S&P 500: SPX