Big Things Happening, Now
With a lackluster summer rally running out of steam and Macro indicators turning negative this month, the market players are out in force to get a real rally underway. Scenes like this are usually a piece of a big change, either a real rally starts from here, or the wheels come off the cart. So watch closely.
Part of the scenario is being played out in the T-Bond market, it reached our 158 target this week for this stage of the rally and is now backing off, probably to the 153 level. What it does from here will be important, if it doesn’t hold the recent 148 lows, we are looking at the possibility of the a head and shoulders chart pattern top that started on October 15, 2014. On the other hand if the 153 level holds and the 158 recent high is taken out, you are off into uncharted waters, with intensified deflationary indications. Now is a time to wait and watch this situation closely.
As to the S&P, the super bulls are out in force today.
They are right, if the market is going to rally, it has to happen now because the Macro technicals started turning down on July 1 and were confirmed on July 23 at a S&P price of 2102. If downside momentum begins to catch hold, this market will unravel fast. Volatility remains at low levels indicating a very low level of fear.
Around the beginning of September we will introduce the “Market Themes” study and methodology with our Nine ETF Market Scenario Portfolios and the monitoring and triggering of the Portfolio Allocation requirements. At the moment and for a long time the market is operating within what we call “The Special Fed QE3 Allocation”.