Although the market has been volatile lately, on a long-term basis, exchange traded funds (ETFs) seem to be doing well. Some of the major ETFs, such as SPDRs (SPY) and iShares Russell 2000 Index (IWM), did not change much from early May to late June. This straight trajectory for these key ETFs combined with the highly-active market leads Brett Steenbarger of Trading Psychology Weblog to believe that a bear market is not in the near future.
As backup for his theory, Steenbarger cites that the market has not had an increase in new lows. In fact, the number is declining. The number of new lows dropped from 917 on June 12 down to 846 new lows last week. In addition, money flows within the Dow stocks continue to do well. Steenbarger sees buying opportunities based on their moving averages. If Steenbarger’s predictions are correct, the bear may not be leaving its cave anytime soon.
For full disclosure, some of Tom Lydon’s clients own shares of IWM.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.