No long dialog will be given today. I decided to look at the daily charts to see what price symmetry might tell us about $SPX potential targets (The Standard And Poors 500 Stock Index).
This bull market looks punch drunk and starving to me, as represented by this rather silly looking male bovine specimen. I wouldn’t buy that bull at auction if it were showing me those ribs. That dude needs to eat something, and fast. Let’s figure out the basis of the $SPX potential targets.
Here are the key points:
1) We closed very near the lows of the day. Given the reticence of buyers to dive in late in the session today, the abolute maximum target low would be that old low at 1867.01.
2) If we fail that, then the odds (which I am running currently) would tend to be about 70% likely (though I will have to confirm it) that we will retest the October 15,2014 low of 1821.61.
3) Perfect price/time symmetry (which is almost impossible to predict) would suggest we would have perhaps a 50% shot at hitting 1753.16 by the end of December 2015. It likely slides in somewhere between there and 1737.50, but no one knows for sure at the moment.
You can pick the “fear du jour” of the moment. It could be China’s faltering economy. It could the Janet Yellen Federal Reserve’s hubris and “translucent transparency” which drives investors and hedgers nuts as they watch the bond market bounce around and currencies flail in the breeze. Energy prices tanking, the slump in Deutsche Bank’s stock price, Glencore’s commodity empire melting down amid what might be a “20-year bear supercycle in commodities”, could all be factors. It is getting hard to see the world economic show without a program. That program is written in everything from English to Mandarin too, so bring a translator with you.
The undeniable thing for the moment to do if you are a long only investor (as I tried to tell you folks in June) is so pare out of things that look really overvalued, keep cash on the ready, and begin to look for stocks that make sense as this market re-calibrates. The nuttiness of statist hubris and the attempt to “control” free markets and haul them into the safety of the great “plastic bubble universe” is a never ending addiction. I would bet against success for that happening, so the pain of this correction could extend for a bit longer.
What might end up being a 17.9% correction should not shock anyone who has been around equity markets for any time. I think what everyone should be concerned about, regardless of your age or financial circumstance, is where terminal interest rate levels will be and how the U.S. Dollar will ultimately fit into the world’s reserve currency system. All of these factors are not free-market-driven. Many are state-controlled. Others are strongly politically motivated by individuals and nations that have axes to grind. Issues over commodity pricing, currency conversion and import prices, and fluctuations in the standard of living caused by such fluctuations have to be settled. Sometimes they are settled peacefully. Other times they are settled by conflict.
For now, the international “nice meter” is sitting on “nice”, but the needle is beginning to shake and move toward the red “angry” side. That will be the big issue as we swing into 2016 and beyond.
That is all I have for now. Thanks again for supporting this blog!