This is a quick market update for readers of Advisor Perspectives. At the beginning of July, we suggested a rally in the equity markets was due, and that July would be an up month. On July 11th we published an article in Advisor Perspectives (Rally Hats Are On And We Are Watching Biotech Stocks For A Breakout) that discussed trading opportunities in Biotech, and suggested a trade in IBB from 125 to 130 was possible. This move has occurred, and for those subscribers of The FRED Report that trade their PA’s, we have taken profits in IBB.
For investors in IBB, we would hold, and buy on pullbacks, noting that if we can exceed this 130-area resistance, a test of the 140-area is possible. We continue Overweight the Healthcare Sector in our Sector work, but with SPY at 414 or so, it is close enough to our targets of 418 to 420 for this rally that speculators should sell. Our forecast for 2022 suggested a low in June, and while this has occurred, we are still seeing problems with our internal indicators that suggests the market could undergo a period of basing. As technician, this would actually be healthier than an advance that becomes overextended. Over the last couple of months we have advocated a dollar cost averaging approach – and in addition, we have been slowly adding back quality growth. We would continue with these strategies here. From a technical perspective, it appears US stocks have completed the first part of a bottom, but more work needs to be done.
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