[newsletterchapter2 title=”GENERAL MARKET COMMENTS”] The BABA Reversal was the Tell as I allowed. Recent dramatic weakness is typical of a viral cascade of negatives which usually culminates in a Capitulation. Extreme low Sentiment does not, by itself identify a bottom. Timing patterns and cognitive conditions are equally important. This looks more like a “Cry the Dip,” than a “Buy the Dip!” Investors may be unduly shocked unless they had a clue.
Talking Heads are shaking their Heads but they do not want to know what they do not know. Who knew there was a cogent profile for a 9/19 High and that a Black Hole was due near 10/13? Someone did. The mass market believes that fundamental stories and rationality rule. They don’t. Markets are really influenced by the changing vibrations of energy patterns. Markets are ruled by esoteric nominal indicants rather than phenomenal fundamental tales.
[/newsletterchapter2][newsletterchapter2 title=”MARKET TIMING FACTORS”] The Negative Price Magnet (Black Hole) due 10/13ish has kept me keeping a Bearish view. I didn’t want anyone to become overly anchored on the potential 10/13 Black Hole.
As I noted, “When markets get “crashy,” trading around weekends can be very dramatic which made last weekend a candidate for overt volatility.” So the Black Hole, 0% and weekend pattern align well for a Low near here. A defined Low is due nearer to the Elections.
[/newsletterchapter2] [newsletterchapter2 title=”MARKETS AS METAPHOR”] Financial Culture Complacency was dispelled. The cascade of Negatives overwhelmed the Bulls. The Market Mind has become very fragile. It does seem that the Negatives may be discounted for now.
[/newsletterchapter2] [newsletterchapter2 title=”RELATED MARKETS”] Gold was desperately trying to reverse and it finally did. Treasuries bounced hard but again, they are constrained on the upside. The Dollar did put in a Spike High. The Energy area is now in a Capitulation zone.
[/newsletterchapter2][newsletterchapter2 title=”SENTIMENT INTERPRETATION”] The best Sentiment interpretation remains that the 9/19 BABA High was cogent. Exceptional Low sentiment has not produced a real reversal as yet.
Now, the ideal Black Hole potential, and a “0%” may be signaling a Capitulation Low. My overall preference was to, “remain cautiously pessimistic.” This is a great time to just get flat. Stocks now need some Bullish sentiment in order to really turn up.
[/newsletterchapter2][newsletterchapter2 title=”INTERMEDIATE TERM SENTIMENT”] The Intermediate Sentiment, shown below, is a longer term view of Market Psychology. It is a slower moving measure and tells us that Sentiment may actually only be in an early stage of shifting from Bullish to Bearish. Given the degree of price damage, it may infer a bigger correction is occurring. Be aware of that.
[/newsletterchapter2] [newsletterchapter2 title=”THE TECHNICAL VIEW”] The SPX dropped below the 200 dma and that has finally caught the attention from the bulls. It is quite oversold and a reflex bounce back to the resistance zone of 1904-1925 would make sense. If lower is needed, the SPX may try for 1863-1843.