Making the turn

Happy Independence Day!

We enter the year’s second half with the flat market profile solidly intact. There is an imperative need for our assets to prosper but this market is not being very cooperative. The second quarter’s small loss broke a string of nine straight quarterly gains for the S&P 500. For the year, the US market and most averages are also flat. In June alone, we had a 2% drop in the S&P 500.

The current levels of US stocks are low in the context of the highs for 2015. The high mark for 2015 is 2130 on the S&P 500 and we sit at about 2071 currently. This means the market is low compared to its range in this tethered, flat market. Soon enough, we should stage a rally back to the highs for this year. Indeed, prominent research provider Bespoke Investments sites that for all periods where the market paused and dipped lower after seven straight advances, the average gain for the following quarter was 7.5% for the S&P 500!

It’s sensible to think an advance of that magnitude is unlikely.  However, good profits can be made and your assets can grow if the market were to merely recover to its June highs. Many stocks in companies with bright prospects are undervalued and present good opportunities.

The holiday weekend is clouded by concerns about the vote in Greece for austerity. Conditions for investing in China are awful as their market enters a bear market phase down more than 20% from its highs. Issues in these two countries are chiefly being cited for the volatility you have noticed in the DOW Jones average this week.

I’m eager to see how these situations play out. If I’m right, this current selloff will set the stage for a good buying opportunity beginning about the middle of this month.

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*Past Performance is no guarantee of future results. Investment management involves the possibility of losses. Significant general stock market moves up and down can influence the performance of client portfolios. Composite returns are based on client portfolios of over $100,000. Not all clients are included in the composites. All returns include the reinvestment of dividends. All returns are net of fees. Composite returns are derived from aggregated, time weighted returns for clients of Peregrine Asset Advisers. Individual client returns can deviate from the composite returns. While Peregrine uses the S&P 500 as a benchmark, Peregrine does not attempt to mimic the structure of this index. Individual client portfolios vary. The number of stock positions also varies per client.