[newsletterchapter2 title=”GENERAL MARKET COMMENTS”] The BABA Reversal was a Tell as I allowed. Weakness has produced some very low daily Sentiment readings including a 1% which was noted last Friday.
There was a Bid from there but it wasn’t sustained. Could this be a “Buy the Dip?” Maybe, but that is not a cogent wager right now. Financial Culture is stymied here. The recent viral cascade is in alignment with my forecast for a potential Black Hole. It pays to wait to see how Big this is.
[/newsletterchapter2][newsletterchapter2 title=”MARKET TIMING FACTORS”]The Spike into the projected 9/19 node was confirmed as Significant. The profile remains for a Negative Price Magnet (Black Hole) due 10/13ish which has kept me maintaining a Bearish view. Stocks are also in a Seasonally weak period. Thus, corrective behavior is expected and lawful.
But it remains to be seen how big this break will be. I don’t want anyone to become overly anchored on the potential 10/13 Black Hole. It has already had its generic corrective effect. Another indicant due near here may provide a pop into tomorrow?
When markets get “crashy,” trading around weekends can be very dramatic. That makes this coming weekend a candidate for overt volatility. A more defined Low may not come until nearer to the Elections. So there is time for Discovery.
[/newsletterchapter2] [newsletterchapter2 title=”MARKETS AS METAPHOR”] Financial Culture Complacency has been dispelled. The cascade of Negatives has overwhelmed prior bullish assumptions. Ebola is not as scary, as the Idea (meme) of it! The Market Mind is in a vulnerable phase. Thus, Metaphors of Uncertainty still have cognitive credence.
[/newsletterchapter2] [newsletterchapter2 title=”RELATED MARKETS”] Repeat, “Gold failed to launch .” It is desperately trying to reverse. Treasuries got their bid again but it just sets up new Selling opportunity. The Dollar remains in a Spike but it hasn’t Reversed, as yet.
[/newsletterchapter2][newsletterchapter2 title=”SENTIMENT INTERPRETATION”] The best Sentiment interpretation remains that the BABA hyperbole on 93% Bullish registered an Interim High. Exceptional Low sentiment last week did resolve into some short term strength.
That 1% looks like it was a short term Capitulation. Further negative factors argue for more downside probing. Thus the overall profile preference is to remain cautiously pessimistic over the next week or so.
[/newsletterchapter2][newsletterchapter2 title=”INTERMEDIATE TERM SENTIMENT”] Intermediate Sentiment, shown below, tells us that Market Expectations have returned to the levels which occurred at the early August lows. I have made a unique study of Sentiment and I can tell you that too many investors try to “grasp” meaning where there may be none. Now, Interim Sentiment is moot & mute.
[/newsletterchapter2] [newsletterchapter2 title=”THE TECHNICAL VIEW”] The SPX found sellers waiting at the 100 dma. If we see continued weakness, the next stop could be the 1899 area-where the 200 dma is sitting-along with some support. The bulls had a chance and they tried-but did they fail?
This would be something we have not seen in a while. Stay opened minded, but more weakness would imply 1899 is coming. There are some areas of support, so the bulls are not dead yet, but they sure are acting like it.