On September 14, 2012 the SPX peaked near 1475. After an almost perfect double top two weeks later on October 5, the markets have been in a good, old fashioned near-term downtrend that found support this morning near 1370, down almost exactly 100 points. Few noticed the corrective activity in anything other than in Apple as the market’s levitation into the Presidential Election was of paramount importance. Is this “market symmetry” or something else?
As I’ve mentioned in the past, there has been little change to our fundamental backdrop between then and now. Even plummeting earnings could not damage the domestic equity markets. But 100 SPX points, about 6.5%, came off the top of the major indices and it came at a time of peak distraction, the Presidential Election.
True, some saw the damage occurring but I bet few were able to profit from it especially with QE-Infinity running in the background. Plus, it is the time of the calendar when money managers close their books for the year and perform all kinds of “adjustments” to their portfolios.
Declining earnings, the Fiscal Cliff, European banking crisis, etc. are simply the latest issues facing equity investors and like in the past, they will be met with the exact same type of Policy Response instituted in the past.
The stock market is the last and greatest playing field for attempting to maintain corporate and consumer confidence. The equity market must not be allowed to fall in any significant way or else the entire illusion is broken. Markets will continued to be “funded” by Central Banks and the can will continue to be kicked down the road. Very little will change on any front. Same shit, different day.
Option Expiration will occur this Friday and there will be a bit of volatility, but that 100 point SPX correction area will be very important near-to-intermediate term support as we meander into the Thanksgiving Holiday. I am still of the opinion that this will be a supremely disappointing quarter for market action. And just remember one thing: in a world awash in liquidity, there is none when you need it.
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fly thinks we are in a new bear market..do you?
let me get this straight
fly is bearish
scott is “bullish”
wtf. question is – which one to fade?
where in this piece did you get that I’m “bullish”? curious!
“Markets will continued to be “funded” by Central Banks and the can will continue to be kicked down the road.”
You seem to be saying the markets cannot or will not be allowed to crash. I agree with you here. The American consumer has not yet been replaced by the Chinese middle class. The petrodollar cannot be replaced yet. This means business as usual for the central banks. It’s really that simple and has been for the last few decades.
The last thing central bankers are going to do is destroy their own credit system by impoverishing the US middle class overnight. They get their power from this same credit system.
whats the bond mkt tellin ya?
Remember that Bullish scallop pattern holding in AAPL?
Guess what just formed in daily charts of every major index, as of today’s close
http://tinyurl.com/bdqhuvd
Of course, it needs to bounce by friday. Or, ATM machines wont be working in 2 weeks. Do or die here
personally in my gut, some tbtf is gonna belly up, the “cliff” is the circus.