The stock market over the past eight months has been referred to as a See-Saw market and/or a Yo-Yo market. We have experienced a slow upswing, followed by a slow/mild correction. From a technical perspective, this is what is known as a range-bound stock market. The overall US equity market is still bullish, but it is definitely slowing down in terms of gains.
A range-bound market is a market that goes up and down for a time, but eventually breaks out of the range (down or up). We have experienced this style of market the past eight months. In December of 2014, the DOW reached 18,100 then slowly fell to 17,100 by late January (establishing a top range and a bottom range). During the next rally, the DOW reached 18,280 by early March, which was followed by a correction down to 17,500 by late March. Yet again, we had another rally up to 18,350 in May, followed by a correction that last week saw the DOW drop to 17,700. This is a range, but it continues to be an uptrend. Each rally, the market breaks new highs on the Dow, and then each correction that follows has the DOW set a “higher low” (17,100, 17,500 and 17,700).
The summer months can be very quiet on Wall Street, and I believe the range-bound market could continue. We should generally have the DOW slowly move up later this summer and get back in the upper range (18,300 or higher) as we move toward our 20,000 target. The 20,000 target is my forecast, but it may not be reached in 2015. The market needs to break out of this style of market, to the upside, by the end of the summer to reach this level in 2015.
In conclusion, the market continues to be mildly bullish. I would only get concerned with my forecast if the DOW drops through the bottom end of the “range” at 17,500.