The S&P is likely to rally as the week opens, but to sell off at the end of the week. The second half of May has been weak seasonally, especially in election years and in years ending in zero. The weekly S&P 500 cycle tops this week (Chart 1). The monthly cycle tops on the 19th and bottoms on June 2nd. We began to see this last week as the S&P did not manage to trade above its 200-day moving average. There will be some recovery early in the coming week, but lower prices are likely into the last week of this month. The high should occur no later than Thursday, the 21st.
The short sales of last week, Wells Fargo (-6.3%) and MMM (-5.6%) were successful. Here are a pair of recommendations, one long for the coming week and one short for the next two weeks.
We look to the S&P 600. Central Garden and Pet weekly cycle gives a buy signal. In the last 12 months, all six buy signals have been profitable. The last sell signal failed which is a bullish development. The stock may reach $36.
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