I’m now turning changing my short term outlook for the stock market. I am now firmly bearish. This is a significant tactical change for me. I’m still bullish for the end of the year but believe that the market will suffer over the near term. Here’s why.
First, the Fed is essentially tightening as they stop quantitative easing. A lack of loosening is the same as a tightening to market action.
Second, virtually all other central banks are tightening.
Third, the economy is weakening as expected which will shake the confidence of the market.
Finally, I’ve been playing with my new analytical took, http://SeasonalFuturesCharts.com and it shows that the stock market drops from May 18 to June 27 85% of the time! This stunning bearish seasonal should not be ignored.
I’m still looking for higher prices at the end of the year as the economy will strengthen and the seasonals will turn bullish.