Wednesday, August 3, 2011

What's Next for the Stock Market?

James Kostohryz

In the coming months we could see some interesting buy opportunities, assuming the global economy doesn't collapse. Putting all of this together, my take on the most likely scenario going forward is the following: After a relief rally associated with the passage of the debt ceiling legislation today or tomorrow, I believe that the market will tend to drift down towards the 1250-1260 support band in the next couple of weeks. I believe that if the market visits that support area, there is a better than 50% probability that it will violate it. The reason is that I think poor economic data pertaining to July and released in August may weigh heavily on the market during the entire month. If the market violates this key support band around the 1250-1260 area, at that point we would dealing with the specter of a potential cyclical bear market.

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