[newsletterchapter2 title=”GENERAL MARKET COMMENTS”] Global Equity Markets continue to exhibit generic, albeit waning, strength as the Liquidity Gestalt matures. This is Amazing even as Geopoliticals have become overtly negative and even, viral. Moreover, the DAX, which was a de facto leader, has faltered badly but some Asian Indices are seeing renewed strength.
The pattern preference was for, “Rolling, diverging strength for much of the Summer.” Equity behavior has finally become mixed but no real Change has occurred. We allowed that minor Corrections could be followed by some upside into Mid-Late August. If an overt and “Phat” High occurs, a potentially dramatic decline may manifest. Repeat: “This is still a Manipulated Market.”
The 7/3, DOW 17K, Cupcake Crumble and the 7/28 new high Reversal are clearly part of a Topping Pattern. We allowed that: “There may be a sweeter Sell spot yet to come.” That might be some sort of triple top or right shoulder over the next few weeks. It still argues for Patience over the next few weeks.
[/newsletterchapter2][newsletterchapter2 title=”MARKET TIMING FACTORS”] The profile allows for strength into month end or into Mid-August. Pullbacks to date have been “Dips to Buy.” It fits with our profile for some final diverging strength into August B4 a larger scale Correction.
There are minor turns are due 8/1 and, 8/8 which are likely to be Highs or, tries for Highs. There are also 8/18 and 8/25 turns. One of them will be a SALE.
[/newsletterchapter2][newsletterchapter2 title=”MARKET METAPHOR”] Financial Culture is still singing its “Happy, Happy, Happy” song. Scary Air Spaces haven’t meaningfully altered these incredibly Booring Markets but an accumulation of negatives is Weighing on them.
[/newsletterchapter2] [newsletterchapter2 title=”RELATED MARKETS”] Gold had a pullback but is holding well. Treasuries continue to Tell of more short-covering. Yellen is keeping the cooing coming.
[/newsletterchapter2][newsletterchapter2 title=”SENTIMENT INTERPRETATION”] The preferred interpretation of Sentiment Behavior has been “Generically Bullish.” The 97% Bullish on 7/7 was only a momentum High.
I allowed that the 9% & 8% readings were only “Dips ” which supported my diagnosis of an underlying Psychological Bid Bias. Recent Behavior is only producing confusing churning as may befit a diverging topping process. The Upside has become even more limited.
[/newsletterchapter2] [newsletterchapter2 title=”INTERMEDIATE TERM SENTIMENT”] The 7/7 sentiment extreme was the momentum High. But Equities remain in an unusual phase of Ebullience. The Investor Psyche is Vulnerable but even more negatives and even more Viral Stories may be required. Domestic Politicals rather than Geopoliticals may be the Key. Keep an eye on the Obama space.
[/newsletterchapter2] [newsletterchapter2 title=”PRICE PROFILES”] Last week I left the door open that we could still be making another wave (4) down. That door is still open as the channel line held and the SPX has rallied. It seems like we are in the final innings of this push up. The overlapping of candles is HINTING that this is some type of topping process. Maybe it will take the round number of 2000 to see some real selling?
If we did make another wave (4) down, the expected wave (5) should be the final push and the top of the channel is between the 1995-2015 zone, depending on when it gets there. But until we see SPX break the rising channel, the bulls remain in control.
There is also a chance we are forming an expanding diagonal pattern. That is where we make higher lows and higher highs. It is a topping pattern-but could call for more upside before completing!