lowtrade

[lowtrade]

S&P up date Going to be long.

Market pull back 3% or more
Market correction 10% or more
Market crash 20% or more

S&P is @ 3% retrace now. Thinking 4% baked in. Several factors are pointing to continued pull back. First in my mind is a change in phycology; because of the failure in sentiment, seen in the chart action. Next is the increase in the dollar. Next is FORD's fall from grace. Last is causing a stalemate in November elections.
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Thoughts on what charts say to me.

Sentiment vs. Phycology: Sentiment short term, tight trend. Phycology long term, open trend.

Price swing envelope: larger the envelope, larger the indecision.
Larger the indecision; stronger the trend.

Thus the size of the price swing channel indicates a change in phycology and long term trend. Or extended sentiment change, changes phycology eventually. This starts with seeing indecision. And indecision is when FAS/FAZ makes sense, in times of large price channel swings. IMO
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Now lets look at the S&P 6 month chart. Until the "V" bottom failed, with huge mindset changing profit taking volume. I saw upward continuation. Following was a obvious change in price swings, prompting my FAS/FAZ trading and the markets large down channel.

If you look at phycology prior to the "V" bottom it was a large flat stalled phycology. Investors indecision. Next sentiment took price down and then up. But tight envelope didn't indicate any change in phycology, until it increased slightly during "V" bottom wash back. Now investors were thinking maybe we should change our minds. Sentiment is changing. The peak huge profit taking, IMO, was that change in long term continuation up mindset. The mid term "V" bottom pattern, sentiment driven failed.

Sentiment failed, and prior stalled indecision was watching for a sentiment decision. That decision was short term traders took profits big time. So the investors made a mindset change. Since phycology is longer term, it take longer for the complete change and you see the indecision (FAS/FAZ channel) in the down trend phycology channel. As investors slowly move to the sidelines. Nothing fast about investing.

Basic, simple, and clean.

Investor reached a point they didn't know if the long up trend would continue. They flip/flopped side ways for a while. Watching where sentiment took them. The "V" bottom pattern was a result of this indecision, Sentiment went crazy. When short term sentiment failed to continue the up trend, on a failed "V" bottom breakout of the wash back high, with a huge exit volume day. Investors started moving out cautiously, but consistently, with the larger indecision price swing channel phycology now down.


change in phycology; because of the change in sentiment, seen in the chart action


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Next is the increase in the dollar.

This is going to lead to Ford. As the dollar increases, profits for big cap's, which produce rev's overseas, decline. They have problems meeting earnings predictions. Bad Q3 earnings, produce market decline.

And next is FORD.

Ford is excepted as the best managed big cap auto company in the US. When the returning (market crash turn around) winning CEO left in July, because he felt his job was done. He said things are fine at FORD. The next Q, management said things had changed real fast for the auto maker. And the stock has plummeted since.

It's my thought if a multi national bellwether see's a fast unexpected decline in Europe, South America, and the US. It kind of feels like trouble in Q4 for the market.


Last is causing a no change stalemate in November elections.

The market is made up of more rich, then less rich. The rich want no change in economic rules in the USA. Because the existing rules have produced such amazing gains for corporations and the wealthy. Change in government, means change in rules. Change is the enemy of the market, not a non function government.

One month before the mid term election and predictions are up in the air. Too many toss ups for a call. Actually more toss ups then ever before this close to the elections.

So if one wants no change in government, what keeps change from happening more then no market climb continuation into the elections, helping incumbents. Or in power parties to add seats.

This is from under my tin foil hat. But I wouldn't be surprised if some market big guys investors aren't moving out, for political reasons. Won't hurt them one bit, moving to the sidelines for a month, with strong gains. If the market bottoms November 5th. And the pull back stops before becomes a correction. I would NOT be surprised one bit.

My prediction; we see the S&P continue lower (chart) as Q3 earnings come in. (the dollar) Flatten between 4% to 6% down. (FORD) And continued high price flux indecision till Nov. (elections) After, depends on how low a flatten stall channel gets. 4% come back climb, 6% possible 10% correction.