What a difference a few weeks can make…
Just three weeks ago, back on July 8, I said…
We got to the 550 level (the lower end of the 550-580 target range I’ve been highlighting) faster than expected.
And stocks look like they could have enough juice to get to 580 in short order. That’s the next major resistance.
That was before 21 days of unprecedented news.
That was before the biggest tech selloff in decades.
But…
That was also before seasonal bearishness set in.
And before companies started reporting second-quarter earnings.
The shakiness you’re seeing in stocks right now is completely normal.
The CBOE Volatility Index (VIX) is still below 20. Things don’t get really interesting until we’re above 30.
And we’re not talking about historic spikes in volatility until the VIX is hitting above 50.
Right now, all this is baked in.
Take a look at the Money Calendar for the last few days of July:
This is the most bearish stretch we’ve seen in months.
And it’s not because of the unprecedented political news.
The volatility we’re seeing right now is completely normal, not at all out of line with seasonal volatility in July.
The markets have shrugged off the news because, unprecedented or not, the headlines are still just short-term noise.
That’s why we saw the SPDR S&P 500 ETF (SPY) rebound after trading through the 540 level…
Why the iShares 20+ Year Treasury Bond ETF (TLT) has completely reversed and is heading back to the upside…
And why gold may finally be running out of steam…
I’ll be watching that 550 level on SPY – how the price interacts with that level over the next few days and weeks will be critical…
But overall, my outlook through the end of the year remains bullish.
There are just too many seasonal and historical factors that suggest markets are heading higher as we head toward the end of the year.
Click below for this week’s video to get my full analysis…
Of course, just because markets are going to be higher in November and December doesn’t mean the next few weeks will be a cakewalk.
In fact, we’ve just kicked off the biggest week of earnings season – which means there’s going to be a ton of action in the coming days.
So stay tuned!
Good trading,
Tom Gentile
America’s Pattern Trader