There is very little to talk about this evening that I haven't discussed over and over for many weeks prior. The market is meandering around with a slight upward bias. No grand explosion since the July 11 breakout over S&P 500 2134. The grand explosion is what normally occurs once a major breakout level has been taken out.

The reason for the meandering is simple, yet complicated, due to the number of problems out there. It's simple in that there are multiple headaches on both a fundamental and technical level. Complicated in that it's hard to know exactly how to play when reality and Disneyland are what we're up against. Do we play reality? Do we play Disneyland? Disneyland is well out in front, but reality needs to be respected. Most don't want to respect any truths. Understandable since it's more fun to ignore the real world.

Why not play the disconnect until the disconnect says enough is enough! With 2134 the number that matters to both sides, and since we're above, the bulls will keep on trying until the bears can seize the disconnect and close it well below 2134. Laugh your way to new plays until you shouldn't. That said, the disconnect can say hello in a way that really hurts without warning. Again, the need to respect what can happen, even though it hasn't in quite some time. So today was just another day. Down a bit. Nothing from nothing, while the daily charts continue to look awful. Negative divergences and with MACD's crossing down bearish from lofty levels. All the other key oscillators are lofty and diverging poorly as well. Yet, with all of this, the fed market is keeping the bull alive with those never-ceasing low rates. Meandering, for sure, but meandering in a bullish way since we're still above 2134 on the S&P 500.

The new major concern, which I will warn you about every day is sentiment. The market is on a sell signal with regards to froth during normal times. The fed market may be saying the new normal is back in the mid 40's, or higher. That's what happened last time around. That said, you never let your guard down once froth on the bull/bear spread has reached the key 35% level. We're at 36%, and possibly rising a bit after this week. You should now always consider froth in to your thinking before playing anything. Great set-ups often die when froth gets up there, and once again, we are up there folks. I think this more than anything else is why the breakout above 2134 on the S&P 500 has been so weak and labored. No powerful burst because more and more all the bulls are in. We're still trying to move higher, but it is very tough to gather energy. Also, with the VIX very low and heading to potential single digits, volatility is almost gone. The price for froth. Just keep sentiment in the back of your mind. It may take higher readings, but don't let yourself get too complacent.

Lastly, will there finally be a rate hike in 2016? Not before the elections in November, so maybe in December. Either way, it will only be one if we do get it, and I have great doubts that we'll ever get any rate hikes this year simply because earnings continue to stink. Six straight quarters of declines. The numbers in October may be the deciding factor, but she'll also consider GDP, jobs, ISM Manufacturing Reports to name a few, but a few big reports to come over the next several months. I say no hike this year, but we shall see. Things will need to pick up everywhere for there to be any chance for hike, since she really doesn't want to raise, even if things get better. She wants the market to keep going higher to support the weak global economy, including here at home.

Have a great weekend.

Peace,

Jack

Jack Steiman is author of SwingTradeOnline.com ( www.swingtradeonline.com ). Former columnist for TheStreet.com, Jack is renowned for calling major shifts in the market, including the market bottom in mid-2002 and the market top in October 2007.

Mr. Steiman's commentaries and index analysis represent his own opinions and should not be relied upon for purposes of effecting securities transactions or other investing strategies, nor should they be construed as an offer or solicitation of an offer to sell or buy any security. You should not interpret Mr. Steiman's opinions as constituting investment advice. Trades mentioned on the site are hypothetical, not actual, positions.

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.