[newsletterchapter2 title=”GENERAL MARKET COMMENTS”] The BABA Reversal told of a Top. Stocks have continued to correct. Recent weakness has now produced a series of very low daily Sentiment readings but there has been no robust bid at all.
Thus, there is not yet any “Buy the Dip,” Behavior. Financial Culture has been “Struck” a bit dumb by recent Market developments. It looks like this viral cascade is in alignment with my forecast for a potential Black Hole over the next few weeks.
[/newsletterchapter2][newsletterchapter2 title=”MARKET TIMING FACTORS”] The Spike into the 9/19 node has been con-firmed as being significant. A profile remains for a Negative Price Magnet (Black Hole) due 10/13ish. Stocks have indeed “tipped” lower. down towards that timeframe. This is also a Seasonally weak period.
I don’t want investors to be-come overly anchored on the 10/13 date. There are also an overt indicant near 10/7. Note that when markets get “crashy,” the Friday close, Monday trade and potential Tuesday Turnaround may manifest as a typical triad. There are other nodes in October. A real low may not come until nearer to November elections
[/newsletterchapter2] [newsletterchapter2 title=”MARKETS AS METAPHOR”] Financial Culture Complacency has been de-demolished by a cascade of overt Negatives. It is not that Ebola is actually scary, it is that the Idea (meme) of it has infected the Market Mind. It is an acute Market Metaphor of Uncertainty. It is being cognitively combined with such other Negatives from ISIS to the Beheading of the Bond King to Hong Kong
[/newsletterchapter2] [newsletterchapter2 title=”RELATED MARKETS”] Repeat, “Gold failed to launch.” Note that Gold has often bottomed near quarter ends. Treasuries have become bid again but this rally is only setting up a new Selling opportunity. The Dollar is in some sort of Spike but hasn’t Reversed as yet.
[/newsletterchapter2][newsletterchapter2 title=”SENTIMENT INTERPRETATION”] The best Sentiment interpretation remains that the BABA hyperbole on 93% Bullish did register an Inter-im High. I have just registered some exceptional Low sentiment which seems to be both confirming this interim Correction but may also be proxi-mate to a short term Capitulation. Downside potential into Mid-October may keep pressuring prices. Market Psychology seems to have, “Changed.”
[/newsletterchapter2] [newsletterchapter2 title=”THE TECHNICAL VIEW”] The SPX broke through the first layer of support and is currently sitting at the 2nd support zone. If it breaks down, the next support is the trend line that has been in place since 2013-which is around the 1923 level. Failure to hold-1901 may come that day.
The bulls need to get the SPX back above 1977 to get any type of momentum going. They have their work cut out for them.