Rally Continues Despite Short-Term Trading Range, Watch for Buying Opportunities

The HCM-BuyLine® is positive, and any pullback should be seen as a buying opportunity. The S&P 500 had a break above 3230 which was positive confirmation that the rally should continue. Look for shallow pullbacks with any news that is unfavorable. There is a tremendous amount of cash on the sidelines, so selloffs should be short lived as investors look for bargains. 

This seems to be a healthy pause with few breakdowns below the June-July trading range.We continue to view the pause as a healthy consolidation following the impressive breadth surge from the deeply oversold cycle lows in March. However, while others have turned negative, we have yet to see evidence that the uptrends from the March lows are failing. In fact, while performance remains choppy within most cyclical sectors, we are seeing a healthy list of stocks breaking-out of their June-July trading ranges. 

Well, the surge in COVID-19 cases in the U.S. is almost certainly over. Today’s daily COVID-19 new cases was 54,827, the lowest in 3 days. Thus, we are now at the stage where we wonder when the general public and media also concur that this surge is ending.  Daily deaths are up, but they are not going parabolic in the same manner which caused cases to explode in July. And now it is 8 consecutive days where daily cases are lower versus 7 days ago. This remains a break in trend and suggests the disease is reproducing at a declining rate.