Investors have had a terrific summer fling with stocks, and, just like those youthful, seasonal dalliances, it is set to end, as fall arrives and some realities set in.
Not to say that the summer fling was not worth it: the rally off of the June 23 Brexit vote, correction has been impressive, with the S&P 500 rallying ten percent, in ten weeks' time and rallying over 20 percent, since the low in February, which represented the second test of 1800, to the downside. The first such test occurred in January.
The subsequent bounce higher installed a prominent double-bottom on the chart, giving technical traders a strong buy signal.
The most recent gains have been more modest, as anxieties in the market build over valuations, lowered volumes and a fluctuating dollar, which has been pushed around by inconsistent musings, emanating from various Federal Reserve officials and the recently released minutes from their last meeting.
The slow grind higher, deeper and deeper into record territory, for the major U.S. average, actually, has been orderly, and earnings have been decent enough, replete with standouts and disappointments, to legitimately power the market higher.
But a troubling factor for the rally, of late has been diminished volumes, which are, of course, not uncommon in the month of August.
At the same time, the recent action in the S&P 500 has the look of potentially working on the installation a rounded-top formation, which is bearish.