I will admit to some surprise at the ferocity of the decline today, but we were aware of the likelihood of weakness, both from the standpoint of cycle analysis and screening data, as well as the end of July liquidity shortage. This report explains the implications of this drop.
The market threw a party for bears today. It seemed as though there were few of them around to enjoy it suggesting that this decline has farther to go. They usually don’t end until the cheering from the sidelines gets really loud. But today at least, price levels that were supposed to be support, weren’t.…
Cycle screening measures weakened slightly today. Nothing happened that would change the outlook. The aggregate indicator remains perched just slightly above the line of the last 2 minor lows.
The market rolled around on the floor laughing for a while before closing nearly unchanged.
For the first time in a while, cycle screening measures have weakened to the point that all are in gear to the sell side. Such negative uniformity on the eve of an FOMC announcement is a rarity. Here’s what that means.
Stocks fell back to a critical trend support level on Tuesday with an air pocket below that on most charts that would probably be filled quickly if support breaks. The FOMC meeting this month coincides with a brief period of negative liquidity.
Cycle screening measures weakened slightly as the market averages rebounded.
The CME shakeout ran its course Friday and early Monday. Support levels were challenged, but held, continuing the narrow, slightly upsloping trading range. What next? The market will wait for Yellen out of the Fed on Wednesday.
Having no incentives to do anything, and no real alternatives for doing anything else, it feels as though traders have simply walked away. Apparently, they’re all in the Hamptons… formulating strategy. Yeah. That’s it. They’re formulating strategy.
The question after today’s “performance” is whether the CME margin call represents signal or noise. The market fell in reaction as expected and short term cycle up phases aborted. But what we don’t know is if that was just an interruption or distortion induced by the margin increase, or a fundamental change of trend.