Current Market View
Stocks: Vulnerable to drop. Nearing the expected weakness period-work the short side with rally attempts into July 1st
Sentiment: Intermediate sentiment has reached bullish levels, making markets vulnerable for a drop
Expected Low: Once the top is in place-expected low due on or near 07/15
MARKET SIMPLICITY: by Woody Dorsey: The profile for “Upside into and through the FOMC and perhaps into 7/1ish” has continued. The High due near 6/22 was actualized but it is not clear if a new decline (into 7/15ish) has already started. I note that the double Lows on 6/9 and 6/15 were a week apart and some recurrent symmetry could provide a 6/22 High and also a 6/29-7/1 High! Equities remain in a topping process into the end of the quarter.
Yesterday’s sell-off and weak close produced a 5% Bullish reading today. Stocks are bouncing back so far today so there is no overt indication of the real break beginning as yet. Greece is only a metaphor for Vulnerability. Still, market participants will continue to use Greece as a trading rationale: “Beware Greeks Bearing IOUs!” As always, “Maintain a flexible Trading Mind.”
MARKET ENERGY: Market Energy suggested “Friendly” FOMC vibrations. And, “Monday (6/22) was also expected to be another Up Day.” Some “backing and filling” was expected this week. It now appears that 6/22 was a High! But, there could be one more upside try next week. “Don’t be complacent.”
MARKET TIMING: A profiled rebound into early July continues. The potential high 6/22ish has been actualized and could yet stand as significant. However, there is another High due near 7/1ish. That Holiday week, with both Month End and Quarter End aligning, could be an ideal time for a High or for a Real Failure. As I noted: “That could be a big day and usher in a correction into at least 7/15ish.” The nominal timing pattern supports that profile. Moreover, there is a specific pattern for weakness on 7/6. Which definitely suggests that any upside near 7/1-2ish date could be harshly denied.
MARKET “TELLS”: Global Equities had indicated: Global Market Changes. “As expected, that Gestalt has seemingly been discounted, near term, allowing for some relative stability.” However, even though Currency and Credit Crises have simmered down a bit, profiles still allow that they will become viral in the months ahead. Many markets seem to be in a Holiday Hiatus. That is due to change when Q3 begins.
SENTIMENT INTERPRETATION: The DORSEY Market Sentiment still identifies Key Support as being near 2040-2045 as well as the 2068ish level. The Sentiment extremes of 4% Bullish on 6/9 and 8% Bullish on 6/16 occurred at that Tactical Support near 2070ish. The Cluster of 90%+ Sentiment Readings in May was typical of a Distributive End Game. Those Sentiment extremes still argue that the Key Resistance near 2134ish is Significant. The Rally from 2068ish had a “Textbook” look. I don’t trust Textbooks. Todays 5% Bullish may only signal a pause rather than the onset of defined declines. I need to see more market time to place it in context. The 6/22 High could be Significant!
INTERMEDIATE TERM: The DORSEY Intermediate Market Sentiment has climbed right back up towards range highs. This Sentiment move thus neutralizes the oversold situation of 2 weeks ago. Nothing has changed. The See Saw continues to, “SeeSaw.” This is penultimate to some new degree of, “Tipping!”MARKET SUMMARY: Stocks have been in another tactical Recovery from overt support. The High on 6/22 holds some potential for an extreme but there is still a bit more time into 7/1ish for upside or churning seductions. It looks like the End Game, is still in Play!
TECHNICAL VIEW by Gary Dean: Tuesday I mentioned the SPX was showing 5 waves up on the short term charts and some backing and filling to the downside would make sense-with 2110 as support. We did get that pullback and the SPX went just below the 2110 support. Things are a little tricky now, as the SPX MAY have already made 5 waves down (green labels on chart) But the door is also open that the last low was just a small wave 3 and we got the wave 4 up this morning-with another low pending-down to the 2104-2100 support zone.
If the second road map is in play down to the 2104-2100 and there are bullish divergences in place, we should see buyers step in for at least a bounce or more. If the bulls lose those levels, then they will be on the defensive and have to really defend the 2088 support. From a short term technical view-there is no clear advantage for either side yet.
Support Levels: 2104-2100/2088
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