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Market Sentiment At Its Lowest In 10 Months

Market Sentiment At Its Lowest In 10 Months

Stocks sold off last week…

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CNBC Squawkbox Europe

LET'S LOOK AT THE S&P 500 INDEX DAILY CHART

I've got to eat a little crow here. My forecast called for the index to find a high between 7 and 12 days up from low and run down into the one year anniversary date of March 6th and start the last leg up in this bull campaign. The index found high the 9th day but found low after 3 days and within 2 more days was at a new swing high. Our strategy was to sell a lower high since the normal lower high would be 3 or 4 days below the 9 day high but within two day it was at that new swing high so we're still spectators. So now the index is going up into the one year cycle from March. Cycles represent probabilities and the price action is reality. You can see each high on the way up, even if it was just for a multi day move down took 4 to 7 days of topping or distributive price action. You can also see there was a bit of volatility during those sideways patterns. When we look at the current circumstance there are three days on the side and the 4th is today but the range of this sideways move is very small and doesn't confirm a top, yet. The day for a high remains Friday or Monday. The index is at the price resistance of the previous breakaway point, 50% of the bear campaign and other numerous calculations. If we do see a top the next few days there are only two probabilities due to the extent of the retracement (75%) and the number of days to the rally. The high is a "secondary high" and starting a bear trend, which I find very unlikely or a run down to successfully test the price support around the February low or marginally higher. Resistance 1128.

LET'S TAKE A QUICK LOOK AT THE DOLLAR INDEX

We were calling for a possible short term top in the dollar from cycle on the 2nd and the index showed a spike and 6 days to test the spike on the 2nd and that is usually a indicating of a lower high and an objective to the lower 79s. But the index rallied yesterday and another up day would put some doubt into that forecast and some key commodities may fall and that doesn't make a lot of sense that commodities will fall along with the dollar. But 6 days against a spike is strong distribution.

NOW LET'S TAKE A QUICK LOOK AT WHEAT and BEANS

So on the other side of the DOLLAR are wheat and beans. These commodities have expired a 60 year cycle that should be followed by a low of some magnitude. Currently both are either building a base or have just completed weak counter trend rallies and are about to get buried and exhaust into that low. Since they tend to go in the opposite direction of the DOLLAR they may yield a clue to the direction of the dollar.

CAN WE PUT UP THE BEAN CHART. You can see it may have started down now. But there is a fast move starting in these commodities in the next few days. I believe its down but the dollar is putting some doubt in that forecast.

 

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