Will we see June gloom, big balloon or summer swoon?

Will we see June gloom, big balloon or summer swoon?
Posted Jun 13th 2007 9:00PM by Sheldon LiberFiled under: After the bell, Rants and raves, Indices, Economic data
All of the major stock indices were up big today, but I am not convinced it means anything at all. More often than not, stocks prices go down in the summer months and for some very practical reasons. It has nothing to do with consumer confidence, they were plenty confident last summer. It has nothing to do with interest rates, they were stable last summer. I think today's market rise is just a big balloon -- a warning balloon!
This market is getting old and one of the things that will tank it for the summer is the money managers knowing that there is better than a 50% chance the market will at least take a breather. None of them will want to be the last one out of the pool. They will want to book some profits for what has been a great run-up this year so far. They will play it safe and safe means market volume will go down. I say this as an optimist and one that is more often a buyer than a seller.
Since I have been writing the Chasing Value column (link below) there have been times when I have found so many great buys I could not write about them all. Now they are harder to come by. If there are less values to choose from then either people are going to pay up to get in the market or sit on their hands. I say they sit on their hands.
People on vacation are less active in the stock market and summer is that time of year. So collect your watch lists, and wait for an opportunity to acquire the stocks you have wanted to own, but buy them on your terms at your price. Today you witnessed the big balloon, that will be followed by a little more June gloom (and higher oil prices, I fear) and then a modest summer swoon ... as usual. If not, and investors choose to blow that balloon up a little more, and then some more after that, you may want to take a step back. I am not suggesting selling stocks unless you are holding things you should not have bought in the first place. I just would not be too aggressive right now.
Those of you who are new to BloggingStocks can check out my other stories and read Chasing Value or Serious Money to find more potential opportunities and verify my track record as well.
Sheldon Liber is the CEO of a small private investment company and the vice president for design and research at an architecture & planning firm. Check out his other posts for BloggingStocks here.