A small “swoon in June” should see the end of the corrective period for US and UK equities, according to Ron Meisels, President of independent research house Phases & Cycles. Thereafter the markets should push back towards the highs made last year.
In his latest report, Meisels asks whether the correction for equities is complete and concludes that the evidence is mixed. The NASDAQ, Russell 2000 and S&P 100 completed one-third retracements of their previous advance and the Dow Industrials came very close. However, the S&P 500 and the NYSE Composite did not complete a full one-third pullback and in Meisels view this leaves open the possibility that the end of May rally is just a “B” recovery wave of a larger “A-B-C” corrective pattern. If this is the case, Meisels says the S&P 500 should fall below its 19 May intra-day low of 2025.91 and approach its 200-day Moving Average at 2,010.
That said, Meisels is more positive in the medium- to longer- term and says, “this bull market seems to have a bottomless well of pleasant surprises, and if the S&P 500 moves higher from here and through the overhead resistance in the low 2,100s then we will have a very welcome – and bullish – resolution. In either scenario, this bull wants to make new highs eventually.”
For the UK’s FTSE, Meisels thinks a final move back towards 6,100 will complete a full one-third retracement, after which it will be well positioned to target the 6,400 / 6,500 resistance zone.
Read the full report.