Once again, the market is taking it personally. How many times have come here in the past year and a half playing Lord Rothschild to warn you we are dealing with a similar market from the late 30’s? What happened was I’ve been talking about it a lot longer but Rothschild went public so it gave the rest of us who are awake a lot of credibility. Still, the market went higher.
Time window season came and went. Then there was Facebook, which got clobbered just as markets hit 618 days off the February 2016 bottom. This was one of the tougher windows the market has encountered this century. There was plenty of reason to believe the 610 would sustain and in certain instances, it has. But for the most part, markets have been higher than they were in the middle of July.
Have we reached the zero hour? Time windows don’t have to validate although much of the time they do. I can tell you one thing, we have a very interesting news event at day 610 off the February 2016 bottom. U.S. President Donald Trump and Russian president Vladimir Putin are meeting as I’m writing this. In any era, when the two superpowers meet face to face it’s a big deal. Given everything, we’ve been through the past couple of years its an even bigger deal.
We are coming to the next phase of the divergence. I woke up this morning, turned on the box and first commentator I saw said we’ve started the next leg up in the bull market. Some of these people take it for granted the market is going up again. Has anyone noticed the Dow and SPX peaked in January?
This is supposed to be a seasonally bullish period. From the end of quarter window dressing through the July 4 holiday the stock market tilts to the bullish side; not always or every year but generally speaking. Why the markets are open on July 4 is another story, but consider the first and last hour without the midday doldrums.
May has left the building and the market has not gone away. Markets are stubbornly hanging on in divergence fashion with the Russell 2000 having made a new high, the Nasdaq 100 very close and the Dow lagging badly. The Dow has never held above the mysterious balance line I’ve discussed many times since March.
Right now, we have a divergent market where the Dow is still wrestling with the middle of the range while the small caps are leading to the upside. The wild card could now be oil stocks now that oil peaked in its 233-day window and made a hard-right turn through near-term resistance. As you can see from the chart below, there were two main support zones based on the recent action going back to the low in February.
Since January I’ve been bearish and I’ve been right. To possibly have to change that bias now could become a pride issue. Am I and those like me to prideful in our views to admit the possibility the market can go back into a sustained rally. Let’s look at the readings. For three months I’ve shown you the Dow vibrations, today we are looking at the SPX. In the SPX we had a 340-point first leg drop. What has that given us? It is the vibrational foundation for the next two lows.
The verdict is in, but I could be wrong. As you knowm, I analyze so many calculations that it’s almost to the point of being robotic. But there is a human element to the markets as well. Really? Here’s the bottom line. The stock market is not behaving well. Markets don’t automatically reveal themselves. It's like poker, they give you certain "tells." With humans, when relationships aren’t going well, you look for ways to salvage. Forgiveness is important to overcoming problems when it comes to people.
Federal Reserve Chairman Jerome Powell went to Wall Street and was not happy enough to enact whatever rate hikes the Fed had planned for this year, and markets were told to count on three more in 2019. Nobody knows what tomorrow or next month will bring, let alone next year. I came away thinking this guy is trying to pop the stock market bubble.