[newsletterchapter2 title=”GENERAL MARKET COMMENTS”] The BABA Reversal told of Market Vulnerability. World War ISIS remains underway and may last for awhile….quite a while? Stocks could continue to correct. The 93% Bullish on the BABA IPO has multiple characteristics of an important interim high.
Now, Recent weakness has produced a low 2% Bullish sentiment but recent trade still does not look like this is a “Buy the Dip,” Financial Culture now seems like it is a bit “stuck” in terms of cognitive and price territory. How it trades from here may be telling.
The downside seems to be slowing right here and more of a two-way pitched battle may be happening.
[/newsletterchapter2][newsletterchapter2 title=”MARKET TIMING FACTORS”] Stocks did Spike into the profiled 9/19-22 node. The next profile identified a short term Negative Price Magnet due 10/13ish. Stocks have been tipping down towards that time frame which is also in a Seasonally weak period.
I do not want anyone to become too anchored on the 10/13 date. There are also an overt volatility indicant near 10/7 and additional negative nodes later on October and in the first 2 weeks of November.
[/newsletterchapter2] [newsletterchapter2 title=”MARKETS AS METAPHOR”] Financial Culture Complacency has been challenged by a variety of negative threads. But the negatives have not been overt enough to really drive new bearish behavior. It seems like more of a cognitive stalemate. This allows that a sloppy cognitive stalemate could be unfolding.
[/newsletterchapter2] [newsletterchapter2 title=”RELATED MARKETS”] As previously noted, “Gold failed to launch when it could have.” Gold is still trying to put in a low and rebound for a few weeks. Treasuries are having lawful bounces but this rally is setting up a new Selling opportunity. The Dollar is in some sort of Spike but has not Reversed as yet.
[/newsletterchapter2][newsletterchapter2 title=”SENTIMENT INTERPRETATION”] The best Sentiment interpretation is that the BABA, 93% Bullish completed an interim High. Now, an exceptional Low 2% sentiment could be confirming of a deeper market shift or, it could be proximate to a short term Low. I still think it may be a bit early for any “Buy the Dip.” Downside potential into Mid-October should keep pressuring prices. Market Psychology seems, “Changed.” Lets see.
[/newsletterchapter2][newsletterchapter2 title=”INTERMEDIATE TERM SENTIMENT”] Stocks continue to unwind from their BABA Hyperbole. The current decline still holds the potential to become a Correction of some note. But, Equity Bulls have not yet really abandoned their Bullish Beliefs. Complacency is continuing to “Correct.” Still, there can be some Stalling and Shuffling near here.
[/newsletterchapter2] [newsletterchapter2 title=”THE TECHNICAL VIEW”] The SPX looks like it could be trading within a large bearish megaphone top. It still would not surprise me if the bulls try and close the 2010 gap-and with the 2% bullish reading-they have the proper set up. If they fail-it may be a tell that things are shifting.
If the recent lows give way, the next expected stop would be the 1953 area. If we see a drop below that pivot-some panic may be in the cards-as the 1900 level would be the next area of support. For now-we have some bullish divergences and the low sentiment readings-gives the bulls the short term advantage-IF THEY WANT IT.