[newsletterchapter2 title=”GENERAL MARKET COMMENTS”] The 10/15 “Black Hole” (0%) Capitulation at the “Ebola Low” was very significant. The persistence of the Recovery remains generically Bullish. Equity weakness suggests that tactical Highs may have been achieved. Note the Reversal in European Equities! Risk Appetite is changing.
[/newsletterchapter2][newsletterchapter2 title=”MARKET TIMING FACTORS”] The “Ebola Low” remains the most cogent timing factor. Market energy due 12/8ish which I thought might be a low has not resolved clearly. There is a broad corrective vibration which may last into 12/22ish. Thus, corrective churning before a potential upside fling into year end.
[/newsletterchapter2] [newsletterchapter2 title=”MARKETS AS METAPHOR”] Financial Culture remains in Complacency.
[/newsletterchapter2] [newsletterchapter2 title=”TIMING SPOTLIGHT-GOLD”] Price Behavior can offer a sentiment “Tell” and “Proof” of markets. For instance, the Black Hole of 10/16 showed what the extreme prices are for S&P and Bonds. Capitulations do that. I identified the 11/7 Gold low as a Capitulation. So, it should be in a Recovery of Interim Degree. The breakdown and subsequent Recovery post the Swiss vote is a Tell and a Proof of inherent Risk Appetite. If there is going to be another section up, those Lows should not be exceeded. The recent series of inside days looks like a Buy set up.
[/newsletterchapter2][newsletterchapter2 title=”SENTIMENT INTERPRETATION”] The best Sentiment interpretation remains that the “0%” sentiment has identified an unusual Capitulation. That extreme may continue to be a cogent inference for months to come. Bizarre strength has continued from there. Nearer term, the upside has flattened and shows signs of some degree of weakness which could persist into 12/22ish. Shorts may keep trying to carefully scalp against 2078ish in S&P.
[/newsletterchapter2][newsletterchapter2 title=”INTERMEDIATE TERM SENTIMENT”] Intermediate Sentiment confirmed the 10/15 Black Hole. Sentiment continues to rebound but still does not offer any obvious extreme or, cogent reversal. Again, more strength can occur but, there is no significant trading edge. An inconclusive profile is not suited to position trading. Don’t believe any Big Pictures.
[/newsletterchapter2] [newsletterchapter2 title=”THE TECHNICAL VIEW”] Nothing has changed from Tuesday-on the technical view.
There are some very noticeable bearish divergences on the SPX. Yesterday we saw the first pullback from the October lows and it would make sense to see some more down before up. The important target for the bears-remains a break of the 2035 low. If we see that-then the door open for a push down to the 2015 and maybe 1988 area.
That is pretty far away and we can’t assume anything and should watch for clues day to day. But if we see some continued weakness-those would be the targets to watch. On the upside, I would think 2100 would be a magnet if the bulls take out the previous highs, but again, nothing is certain in this market right now.