[newsletterchapter2 title=”GENERAL MARKET COMMENTS”] Global Equity Markets have continued to exhibit generic strength as we allowed. Again, we proffered that: “Rolling, diverging strength could continue for more of the Summer.” But, Summer is passing. There is still some time for further diverging, potential upside but not for long.
When and if the Liquidity Complacency bursts, in August?, an important Vulnerability profile may manifest. Repeat: “This is a Manipulated Market.” The view from the sideline has been great. Stocks now seem to be in a Correction but it is of indeterminate degree. There may yet be but an even sweeter Sell Spot be discovered.
[/newsletterchapter2][newsletterchapter2 title=”MARKET TIMING FACTORS”] The profile allowed for strength into the end of Q2 and the July 4th Holiday week. Then, there was “an unusual timing pattern due 7/14-16. The presumption was that stocks would break down into there from some sort of Holiday High.” It did and it was scary but did not get real traction.
This makes near term timing very MESSY. We wanted to see the market behavior into 7/14 before further diagnosis. Obviously the market held. Still the timing is very suspicious here. Maybe there is weakness into Friday and then stocks find a tactical buying zone near 7/24ish to set up one more upside episode.
[/newsletterchapter2][newsletterchapter2 title=”MARKET STORIES”] Financial Culture has been and remains relatively “Happy, Happy, Happy.” It was and is, incredibly Booring. The Holiday High with Dow 17K and 97% Bullish with the Cup Cake Crumble have a Toppy aroma.
[/newsletterchapter2] [newsletterchapter2 title=”RELATED MARKETS”] Gold is having a hard purge but the profile remains bullish and Volatility expansion could be a subtle positive. Treasuries are still in some sort of Strange Range. They have had opportunities to come unglued but could not do so. Janet Yellen seems to be tweaking her coo just a bit today.
[/newsletterchapter2][newsletterchapter2 title=”SENTIMENT INTERPRETATION”] My interpretation of Sentiment Behavior has been “Generically Bullish.” The 97% Bullish on 7/7 resulted in a decent decline. But, the Correction from there could have been more overt. It only produced a 9% Bullish reading and stocks snapped right back.
Bigger declines need more Negative News to Rationalize any Real Selling. The Market has to change its Mind before any notable Exodus.
[/newsletterchapter2] [newsletterchapter2 title=”INTERIM SENTIMENT”] The 97% on 7/7 could have structural importance. Intermediate term sentiment has already achieved Ebullience. Thus, the Investor Psyche is Vulnerable. Big Declines will likely need more Durable and more Viral Negative Stories. Domestic Political rather than Geopolitical may become more important to watch.
[/newsletterchapter2] [newsletterchapter2 title=”PRICE PROFILES”] Last week I mentioned that the SPX looked like it completed wave 5 of (3) and a wave (4) down was next. The target area was 1955-1945 and 1952 was the low.
The door is still open that the low is not actually in yet and we just made a wave (A) down– completed wave (B) up and have just started wave (C) down of wave (4) down. But the count will also make sense if we already completed wave (4) at the previous lows.
It is hard to tell, but until we see SPX break the rising channel, expecting another push higher makes the most sense. Once that completes, things may get a bit challenging for the bulls.