The equity bull market is successfully absorbing selling pressure, according to Ron Meisels at Phases & Cycles, who thinks investors should stay the bullish course and position themselves for one final ride-up.
Meisels says that the end of October / early November is usually the start of a period of seasonal strength and thinks the next bullish advance should take the S&P, DJIA and FTSE to all-time highs. His analysis is based on four key factors:
1) While the US presidential election may be causing uncertainty, the markets were due for a pullback period after strong early summer gains.
2) Cyclical influences have been exerting downward pressure over the last two to three months, but these were experienced in the context of a strong bull market with most major market indices remaining well above their rising 200-day Moving Averages.
3) Pessimism is growing and money managers are holding the highest cash levels in 15 years. This represents good fuel for a bullish move.
4) While the S&P 500 has traded below its declining 50-day Moving Average over the past seven weeks, it continues to hold above the important 2120 support level.
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