“GENERAL MARKET COMMENTS” Global Equity Markets were “Stalled” before beginning to unravel. The BABA spike and subsequent Reversal on my Timing Node is a cogent Tell. As I detail below, this could finally become a notable Correction into a, “Black Hole” which may occur in October. It is hard for Investors to recognize how Price, Sentiment and Market Stories interact in the context of a market forecast.
My Sentiment is the best there is but, it always has to be interpreted. The 93% Bullish on the BABA IPO may not look cogent but it is, in the context of the price thrust and the news near that event. One might typically to see overt or very high sentiment like 100% at a Top. Not usually, it is often a more “Reading” of all of the market signs in the three Cognitive spheres of the Brain.
“MARKET TIMING FACTORS” Stocks did rally into the predicted Timing node and have turned down. My Timing Profiles are based on 40 years of study. There are aspects of my studies which have never bee published. One factor is the potential for what I call “Black Holes.” These re typically short term Negative price Magnets.
There is one due 10/13ish. Thus, stocks may now be beginning to tip down towards that. Since this is also a Seasonally Negative period, probabilities favor an eventual very negative surprise. So , let us see how it manifests.
“MARKETS AS METAPHOR” Financial Culture seems to be challenged by the viral re-emergence of ISIS and Ebola. The FED, Scotland Vote and BABA have come and gone. All they did was heighten near term Uncertainty. Market participants seem to have a belly full of Bullish Stories. Now What? Risk is Rising.
“RELATED MARKETS” As noted, “Gold failed to launch when it could have.” Dollar strength supported Metals weakness. Gold is trying to reverse near here. Treasuries broke down but are now having some lawful bounces.
“SENTIMENT INTERPRETATION” The Sentiment interpretation was that the 8/8, “Buy the Dip” Low might result in new Highs. Now however the Highs on the Bullish Sentiment Cluster and the BABA High @ 93% Bullish have identified a defined High. This Topping Process has provided a new degree of clarity. Market Psychology may finally be Changing.
“INTERMEDIATE TERM SENTIMENT” Stocks failed again from the BABA hyperbole on the significant Timing Node. The current decline does hold the potential for one of the best Corrections in some time. However, equity assets are still under a “Halo” of assumptions about their inevitable upside. The best way to “Correct” that is, to Correct hard now!
“THE TECHNICAL VIEW” The risk clearly remains on the side of the bulls. With 5 waves up, the risk of a sharp drop grows stronger and stronger. Can the SPX bounce from here? Absolutely! Will it just test the previous highs or make new highs? We still need more information and that is a chance. But upside should be limited and bulls have to be careful here-if looking longer out.
There is short term support at 1980, which is not that far below. The VIX is outside the bollinger bands, so expecting some type of bounce is likely. The gap at 2010 will most likely be filled before any strong move lower. May not be a bad spot to build a short position-if it gets back up there. Be careful on the long side-use it to scalp trades and build a short position.