“GENERAL MARKET COMMENTS” Global Equity Markets have stalled even though, “Peace” has broken out!? The Liquidity Gestalt still has a halo and, a following. The 8/25ish node more or less stopped the upside momentum. I noted the lack of profile clarity over the last week or so.
That strangeness is continuing and has produced a sideways market which may continue into the next node of note due late next week. Expected overt Dollar strength accentuated Crude and Oil weakness.
“MARKET TIMING FACTORS” Again, very near term timing profiles lacked cogency and the market has in turn been sloppy. The next node of note has always been due near “9/22.” This may manifest as early as 9/18.
There is a cluster of date certain events: FOMC: 9/17, Scotland Vote: 9/18, and the Ali Baba IPO: 9/19. More defined negativity has always been due in the first two weeks of October. Thus, the 9/18-22 node looks like it could be a Cognitive Breakdown.
“MARKETS AS METAPHOR” Financial Culture is looking for a new and more defined Market Reasons to go up. Negatives were discounted?
But, for how long? Stocks are assumed to go up into year end and Rates will not start rising until later next year? But, these Complacencies are allowing a kind of dangerous boredom.
“RELATED MARKETS” I noted that “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.”
Thus, recent trade fits with those ideas. Treasuries remain @ Risk and they did not trade that well last week. Moreover, Bunds did not rally on the ECB move. Fixed income paper is very tired.
“SENTIMENT INTERPRETATION” The Sentiment interpretation was that the 8/8 Low, “Buy the Dip” could result in new Highs. But, Recent Bullish Sentiment readings inferred upside maturity.
The 8/25ish node stopped the upside momentum. Stocks have gotten, seriously “Sideways.” Messy but uncertain topping behavior may continue over the next week. Yes, Upside is still possible but is becoming more and more unlikely.
“INTERMEDIATE TERM SENTIMENT” Stocks have made a “round trip” back to Ebullience. Thus, they are vulnerable again. Market Negatives were Discounted @ the 8/8 Low and now the Positives may be discounted again?
The timing node due 9/19-22 should ideally produce some downside Recognition. That time frame is not that far away!
“THE TECHNICAL VIEW” The SPX has enough waves to count this move higher complete. The only thing lacking is confirmation it has indeed completed. A push below 1990 would be a start and if downside mom was to pick up-1900 would be a target.
There is still a chance the SPX has some more squiggles to go to complete this wave 5 up-but the bearish divergences as well as a “defined 5 waves up” puts the bulls at risk for a sharp drop-that could hit any time. If higher is needed-the 2020-2030 remain upside targets.