Have we bottomed for the summer? The simple answer is, quite possibly.
My work was looking for three things to come together:
- A break of the October '11 lows for leading stocks/indices, such as GDOW, BHP, ITUB, & SU
- A spike higher in VIX, possibly to the low 40's
- An early June low, followed by a 6-8 week bounce
So where are we now? Stocks such as BHP and ITUB have indeed broken their October '11 lows. GDOW and many energy related names, such as SU, have yet to break their October '11 lows. Let's take a look at BHP first. A global commodity megacap, it has been leading the market lower. Of the leading stocks that I follow, it has one of the best technical structures. It is currently overbought on the daily chart. I would look for some selling this week, followed by a possible move higher into mid-July to backtest it's broken trendline coming off its November '08 low.