[newsletterchapter2 title=”GENERAL MARKET COMMENTS”] Global Equity Markets still look like they made interim tops at the July Highs. The Liquidity Gestalt may have been reprise in very recent days by a seeming return to easy upside in equities. The profile preference remains: “The Market has Changed.
A Selling Vibration has been initiated.” The Interim High is only 19 days old. The profiled High due near 8/25ish is actually a cogent Shadow High. Thus, the robust run up into there is lawful as a Secondary High. The early morning plunge on 8/8 created significant support for the current price trampoline. The Recovery may last into the next node due 8/25.
[/newsletterchapter2][newsletterchapter2 title=”MARKET TIMING FACTORS”] The profile for some time was that the next timing node “due 8/25 may be a Big Breakdown.” The 8/8 node produced a dramatic early morning Low. The 8/25 turn is very cogent and may even come in by 8/22.
Once it is confirmed, the timing profile suggests an initial decline into 9/3–9/8. Interim Corrections remain due into 9/20ish and beyond into the Fall.
[/newsletterchapter2] [newsletterchapter2 title=”MARKETS AS METAPHOR”] Financial Culture abandoned its’“Happy, Happy, Happy” Song when the viral cascade of Negatives overwhelmed Financial Culture. Now, they have all dissipated. A new Ebullience is afoot. The 8/25ish Turn may be coincident with a Re-infection of some of those Negatives which could become viral again.
[/newsletterchapter2] [newsletterchapter2 title=”RELATED MARKETS”] Gold did have a surprising Recovery but it went nowhere. Neither Good News nor Bad News seems capable of moving it? It still has Bullish potential into the Fall. So, something New is coming? Treasuries remain @ Risk but Short-covering continues. They may be just Doomed to Range.
[/newsletterchapter2][newsletterchapter2 title=”SENTIMENT INTERPRETATION”] The Sentiment interpretation remains that an Interim High has already occurred. The S&P 1955-60 Level was deemed as critical but has been exceeded. Maybe it was a, “Buy the Dip?”
The early morning 8/8 Low produced overt expected upside. With 97% Bullish today, that surprise is discounted. Prefer that a bit more upside unfold into 8/22-25ish which remains the next timing node of note is due.
[/newsletterchapter2][newsletterchapter2 title=”INTERMEDIATE TERM SENTIMENT”] The 7/24 Extreme was an Interim High and the Market Psyche is still under some pressure. But, the Negatives were Discounted @ the 8/8 Low. Domestic Political issues may become cogent. The Corrective Vibration can become viral again, maybe after 8/25. This Holiday atmosphere may have a short time span.
[/newsletterchapter2] [newsletterchapter2 title=”THE TECHNICAL VIEW”] Last week we mentioned that with 5 waves down and low sentiment on 8/8, a fast reflex rally was on deck-with a possible upside target at 1973. We are here now and a little more. A turn anywhere up here would not be a surprise.
Wave 2’s up (if that is what we are in) are made to suck in the bulls and force the bears out. Once completed, the wave 3 down traps those bulls and makes the bears chase, what they were forced to cover typically right before the turn down.
Many wave counters are looking at this move as a wave 5 up (the last move) before a large drop. I like our original thought process with this being a wave 2 up which will be followed by a hard drop-most likely on or near the 8/25 turn date.
If we see new highs, it will most likely be minimal and since it would be the 5th wave-a very sharp drop would be pending (8/25?) It could also form in a double top. Either way, the next large move should be to the downside from here-which will most likely hit near the 8/25 turn date.
Shorts were forced to cover yesterday and traders were sell the strength. That doesn’t mean the tape has to turn right away, but upside will start to get harder and harder.
The last time we saw this type of selling into strength, was when the SPX was trading at 1991-the top came the next day. A pull back and then a final push higher into 8/22-25?