Image source: Pixabay

I haven’t written an update in a few weeks, as I haven't come across any trading ideas worth talking about. The stock market has been pulling back in a corrective wave in the cyclical bull market that began last October. That pullback is likely near an end now though, as the stock market is the most oversold it has been all year.

You can see this with the fact that the S&P 500 now has the lowest RSI reading it has seen since October, and its daily stochastics have now spent more time under 20 than it did in February and March when it last experienced a corrective wave.

So far, the pullback has not really been a significant one in terms of size, as the S&P 500 has not even retraced 1/3 of the gains it made from its October low and July high.

Personally, I don’t think the market is going to have a major drop from here or actually go to new highs and have a huge run, either. I think we are entering a new phase for this cyclical bull market that is likely to be defined by a drifting sideways range for some months, probably into the end of the year.

It’s worth noting that the Fed Fund futures are also saying that the Federal Reserve is most likely not going to raise or lower interest rates for the rest of this year, and the next move is basically 50/50 if it is going to be a cut or a hike.

In other words, the bond market is not going to see much change in the economy for the rest of this year, either. Inflation is not going to get a whole lot better from here, but the economy is not on the verge of a rapid deceleration. It’s not booming, it’s simply muddling around.

As far the stock sectors go – I just looked through all of the sectors, and the top sectors this month, during this pullback, have been the energy complex and shipping stocks.

Many energy stocks, like Exxon Mobil (XOM), are actually up this month. They, of course, had been lagging the market all year as energy prices dipped, but oil prices put in a nice bottom in July, and now the stocks are turning up. It should be noted that I own XOM.

I have previously pointed out ESEA as another stock I owned in my last update.

It should also be noted that ESEA is paying an 8% dividend.

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