GENERAL MARKET COMMENTS: Global Equity Markets have reverted back to the prior Liquidity Gestalt. We had profiled for a rally from 8/8ish into 8/25ish. But, no one expected such a robust degree, so quickly, of such easy upside in equities.
The profile preference remains that some degree of interim High is unfolding. The profiled tactical High due near 8/25ish always had cogency as a potential Shadow or, Secondary High. However, a Reversal is required to Ratify that. Moreover, a new conceptual Negative impulse should also occur concomitant wit that.
MARKET TIMING FACTORS: The profile was that the timing node due near 8/25 would be a High of some degree. Here we are and stocks have definitely rallied into it.
The near term notion was that, “Once it is confirmed,” the timing profile suggests an initial decline into 9/3-9/8. A High is not confirmed yet but the timing for Corrections into 9/9 remains. There are other Negatives for the Fall.
MARKETS AS METAPHOR Financial Culture has tuned back into the “Happy, Happy, Happy” Song? Or, is this just a senseless Summer fling? At any rate, Negatives seem to be dissipated. The 8/25 node is an opportunity for some degree of Re-infection of the Negatives. Lets see. Elsewise, it is Same Old Stuff.
RELATED MARKETS: Gold hasn’t gone anywhere. Neither Good News nor Bad News can motivate it? It has Bullish potential into the Fall. Is something New coming?
Treasuries remain @ Risk but are engaged in Short-Covering and following the Bunds to new heights. Maybe Bonds are Doomed to just Range?
SENTIMENT INTERPRETATION The Sentiment interpretation is that an interim High is forming. Overt Resistance levels have been easily exceeded. Thus, the early morning 8/8 Low really was a “Buy the Dip.”
Recent high daily sentiment readings have aligned with the 8/25 Turn date and argue for some incipient Corrective behavior. The 8/25ish node was and is, of note regardless of recent strength. There is limited upside from here.
INTERMEDIATE TERM SENTIMENT: The Stocks are fleshing out new highs. The Market Psyche is still vulnerable but, who cares? The Negatives were all seemingly Discounted @ the 8/8 Plunge Low.
Domestic Political issues may yet become more important than Geopoliticals. Corrections may become viral? If so, the Upside Holiday may be concluding.
THE TECHNICAL VIEW: The SPX has made fresh new all time highs-that would be the good news for the bulls. The bad news, we can clearly count 5 waves up and a pending drop would be on deck. How deep the drop could be is tough to call. Below 1903 would mean a much much deeper drop is at hand that could surprise many.
The short term support levels to watch 1998-1960 and then 1903-which would be the line in the sand. We could see the SPX run as high as 2015-2020, which are areas where sellers may be waiting-but pay attention to ANY turn from these levels! The larger move from these levels-should be to the downside. With the divergences between indexes, and lack of volume, be careful trading the long side.
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