GENERAL MARKET COMMENTS Global Equity Markets have reverted back to their prior Liquidity Gestalt. We had profiled a rally from 8/8ish into 8/25ish. That was a clear timing and sentiment profile. But, there is no such clarity right now.
The late August High still has cogency as a Secondary High. However, new price and concept Negatives would be required for that to manifest.
MARKET TIMING FACTORS The timing node due near 8/25 was profiled to be a High of some degree. Stocks did rally into it. The timing profile had allowed for some weakness into 9/3-9/8. Generic tactical strength has overwhelmed that idea so far.
Still, Corrective behavior to some degree may occur into 9/9. But, the timing is not nearly as cogent as were the 8/8 and 8/25 nodes. The next node of note comes due 9/22ish.
Thus the next week or so has a poor risk reward environment. More defined negativity is due in the first week or two of October. So, something is brewing but may need more Topping/Diverging to occur.
MARKETS AS METAPHOR: Financial Culture is searching for a new understanding. Negatives have been dissipated? The 8/25 node was projected to be coincident with some “Degree of Re-infection of the Negatives.” It did, in terms of ISIS and the Ukraine but those ideas are not apparently, “Market Centric.”
RELATED MARKETS: Gold failed to launch when it could have and should have. It seems that the key market message is that the strong Dollar and weak Energy markets are Deflationary.
Gold is responding more to that theme than to Geopoliticals. Gold may be setting up for more sober basing than any durable upside.
Treasuries remain @ Risk. It is interesting that their latest orgy of Short-Covering seems to be failing. The key fixed income factor to watch are, the Bunds.
SENTIMENT INTERPRETATION: The Sentiment interpretation is that the 8/8 Low was a “Buy the Dip.” Recent High Sentiment both confirmed market strength and inferred upside maturity.
The 8/25ish node was expected to be a High. Stocks stopped going up but then only went sideways and got bid again. Thus, any cogent and pure sentiment interpretation is sorely lacking at this time. Upside is possible but not at all promised.
INTERMEDIATE TERM SENTIMENT Stocks are making new highs which may be best interpreted as just prolonging the prior Liquidity Gestalt.
The Market Psyche is still vulnerable but the acute Negatives were seemingly Discounted @ the 8/8 Low. Domestic Politicals could become more important than Geopoliticals but the immediate profile is just, messy.
THE TECHNICAL VIEW: The SPX continues to extend in this wave 5 up. Being very overbought and showing bearish divergences, traders have to be careful falling into the “complacency trap”. When it turns, it may catch many by surprise and the dip buyers will continue to do what they have been trained to do-“buy the dips”
It is when the indexes DON’T do what they are supposed to do “rally” when traders realize they are trapped. Then and only then, will we see downside momentum pick up. We have NOT seen that happen yet, as every dip has found a floor not too far below. 2015-2020 was mentioned as possible tops for this rally. The spx futures hit 2011-close enough?
Whether the SPX needs to get to those targets or not-things are getting very dangerous up here-when viewing the tape from JUST an Elliott Wave” view. The wave count is leaving the door open for a drop below the August lows-and some. But that is a bit far out and for now-caution is best for the long side trade-but it could extend higher.