[newsletterchapter2 title=”GENERAL MARKET COMMENTS”] Global Equity Markets have been in a serious “Stall.” The Liquidity Gestalt is, more or less, over but investors have the habit of relying on its’ rationale for bullish bets. The 8/25ish node, more or less, stopped the upside momentum.
The Correction from there has been modest enough to allow for differing Interim contexts. Is recent weakness another quasi “Buy the Dip” or are we in a slower motion decline which could typically last into October?
This weeks’ notable node of uncertainty influenced the market but was perhaps discounted. A new trade of note may be the Reversal and Rally in the Energy area.
[/newsletterchapter2][newsletterchapter2 title=”MARKET TIMING FACTORS”] There is a cluster of date certain events due this week. If stocks are able (as they appear to be doing) to pop up into it, the result may be another series of setbacks into the first two weeks of October. Thus, any “Big Picture” convictions may be misleading and anything can happen
[/newsletterchapter2] [newsletterchapter2 title=”MARKETS AS METAPHOR”] Financial Culture seems marginally confused here. Rates are Rising but, not importantly? Stocks are surely due to Rally into the end of the year? ISIS will be vanquished after all but, when? Scotland is surely changing but by how much? Who knows and who cares? Complacency.
[/newsletterchapter2] [newsletterchapter2 title=”RELATED MARKETS”] As noted, “Gold failed to launch when it could have.” The Market Message was that the strong Dollar and weak Energy markets are Deflationary.” But, Energy put in a Capitulation Low? Gold has a Reversal day so far for today. Treasuries were always @ Risk as we had always allowed.
[/newsletterchapter2][newsletterchapter2 title=”SENTIMENT INTERPRETATION”] The Sentiment interpretation was that the 8/8 Low, “Buy the Dip” could result in new Highs. It did but, it failed. Still, the decline from the Bullish Sentiment Cluster has not been definitive either.
The 8/25ish node stopped the upside but then the Market simply turned Messy. The lack of downside momentum opens the door to more messy market action. Thus, the sentiment message is a bit muddled.
[/newsletterchapter2][newsletterchapter2 title=”INTERMEDIATE TERM SENTIMENT”] Stocks failed again from an Ebullient extreme. The 8/8 Low resolved into a robust rally towards new Highs. So, there are mixed message given the overall timing profiles. What if Stocks stay Corrective this Fall but just trace out a Range?
[/newsletterchapter2] [newsletterchapter2 title=”THE TECHNICAL VIEW”] We continue to see all of the indexes running on their own. There is no consistency. One day we are seeing strength in the small caps and tech.-the next day we are seeing the Dow and SPX green as small caps and Nasdaq get smoked. It is NOT a sign of continued strength and hints of a larger drop pending.
Short term, I am seeing some bullish divergences and the SPX held support. It just broke through the bullish falling wedge and that pattern would suggest a move back to the 2006-ish level. New highs? Maybe, it’s hard to say the chart pattern on the SPX is overly bearish, as it really looks like a consolidation pattern. But with the indexes not running together, traders should be on high alert for some type of sharp drop.
Nothing has really changed on the wave count front-we could still be seeing the SPX make some type of minor wave 4 down and wave 5 up is in progress. But once this minor wave 5 completes, a sharper drop would be expected. The risk for the bulls. there are already 5 waves up on the daily chart. So holding out for the last minor push higher is very risky. Whether that plays out or not-is yet to be seen. Risk remains on the side of the bulls.
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