Stock Market Yet to Make Lower Low

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Don Hays of Hays Advisory comments on the recent technical pattern and action of the Standard & Poor’s 500 Index.

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“The stock market is setting the stage.” – Don Hays

While panic was the mantra of popular opinion as the stock market fell last week, Don Hays, founder and chairman of Hays Advisory, believes that the shouting of the investment community’s herd overshadowed many positive questions that arose in the wake of last week’s tumultuous market actions.

Since the stock market’s panic low that was made on August 8th, the S&P 500 Index has traded within a narrow range, and it has yet to break its closing low of 1,119.46. While Hays suggests that a more typical technical pattern has not taken form yet as the index refuses to break its previous low, he does find some similarities between the market’s recent actions and those he witnessed during last year’s correction.

According to Hays, the Congressional Super Committee’s future actions, or lack thereof, are the likely cause for the market’s recent range-bound trading. He believes that “the stock market is setting the stage,” just as it did last summer when the mid-term elections were approaching, in order to digest expectations on the country’s future before it makes its next strong upward move.

Also, in light of the negative expectations being published by many market strategists, Hays finds further bright tones in today’s market as he’s taken note of the recent outperformance by growth-oriented stocks, over the safe-haven, value-oriented stocks that many investors focus on during declining economic environments, which suggests that optimism is greater than popularly assumed.

About Hays Advisory, LLC

Hays Advisory produces stock market and economic analysis for individual and institutional clients that is both widely followed and internationally recognized. Subscribers may gain insight from Hays’ disciplined, unemotional approach and a better understanding of the factors that are driving long-term market trends.

In addition to providing research, Hays Advisory manages an assortment of investment portfolios focused on domestic, international, and global equities, along with two new portfolios that seek consistent returns and downside protection by investing across multiple asset classes.

At the core of the research and asset management business, is a time-tested tactical asset allocation model. This disciplined approach is designed to move more assets away from stocks when the model indicates higher market risk and allocate more assets to stocks while in the early stages of the up cycles.


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