Riding the Bear to the Midterm Bottom
Posted: 22 Jun 2022 08:51 AM PDT
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Riding the Bear to the Midterm Bottom
Thursday, June 23, 2022 | 11:20 am – 11:50 am EDT
Cash is a position and patience is in order as we navigate the worst months of the year and the weak spot of the four-year cycle. But 2022 is setting up for a prototypical midterm bottom hitting its low point in late Q3 or early Q4 in the August-October period, just ahead of the midterm elections. Jeff will show you how to navigate this volatility and be ready for the next bull market rally. Inflation is stubbornly remaining at multi-decade highs, the Fed is tightening, sentiment is bearish, support levels are not holding, supply chain disruptions persist, there is conflict in Europe and energy prices are at record highs for consumers. Continue to be patient as the weak spot of the four-year-cycle will eventually give way to the sweet spot, likely sometime later in Q3 or in early Q4. Even with inflation at multi-decade highs, cash is likely the least risky place to wait.
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Hi everyone, Jeffrey Hirsch here.
At The MoneyShow Virtual Expo, June 21-23, I’m joining over 60 of the country’s most sought-after financial experts to share real-time insights on 2022’s fast-paced market and economic conditions to help you reduce portfolio risk, fine-tune your tools and strategies, and capitalize on the best investing and trading opportunities across every asset class.
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- Tom Sosnoff, Founder & Co-CEO, tastytrade
- Steve Reitmeister, CEO, StockNews.com
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- David Keller, Chief Market Strategist, StockCharts.com
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I hope to see you there,
Editor-in-Chief, The Stock Trader’s Almanac & Almanac Investor
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Beware summer rally hype, historically the weakest of all four seasons
Posted: 21 Jun 2022 01:50 PM PDT
Most years, especially when the market sells off during the first half or is flat, prospects for the perennial summer rally become the buzz on the street. Parameters for this “rally” were defined by the late Ralph Rotnem as the lowest close in the Dow Jones Industrials in May or June to the highest close in July, August, or September. Such a big deal is made of the “summer rally” that one might get the impression the market puts on its best performance in the summertime. Nothing could be further from the truth! Not only does the market “rally” in every season of the year, but it does so with more gusto in the winter, spring, and fall than in the summer.
Winters in 59 years averaged a 13.0% gain as measured from the low in November or December to the first quarter closing high. Spring rose 11.8% followed by fall with 11.0%. Last and least was the average 9.4% “summer rally.” Even 2020’s impressive 25.2% “summer rally” was outmatched by spring’s massive 48.3%. So beware the summer rally hype as it is usually the smallest rally of the year and can fade just as quickly as it began. Following the worst weekly loss since 2020, today’s DJIA 2.1% gain likely has stirred hope that this is the start of a summer rally. More likely, today’s bounce will fade as inflation is still raging and the Fed is still tightening monetary policy.