Yes, remember that couple of weeks ago all analysts on the floor were talking about Tuesday rallies and finally in the last two Tuesdays the market really plunged. So that is the wisdom again. Some rule works for a while and then Mr. Market changes and doesn’t work anymore. That is the magic of the market.
The final yesterday results, which not a disaster, but reasonable drops:
- S&P 500 -0.7%
- Dow -0.8%
- Nasdaq -0.7%
- Russell 2000 -1.5%
The selling intensified in the afternoon and finally the DJIA closed in three weeks low. In bigger picture the market is in roller-coaster mood. One or two days up and then down again. The green bar – red bar pattern creates high volatility and seems for many investors no direction at all. This makes the investors bored and when the vast majority is bored enough Mr. Market will go up rapidly and surprisingly. This is the war of nerves recently.
The old rule says after the Memorial Day – next Monday – starts the summer season. We are expecting clearer direction in the summer upside because the last five months without any clear direction and hesitation the market needs to find its way and this period of yo-yo pattern needs to be shortly over. There is nothing exceptional about if the summer rally this year will come. Last summer was really boring and always happens the opposite of the consensus.
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