I have been talking about the 2nd half of September and Q4 as a logical time for a market pivot for quite a while now. This was not just wishful thinking; it was the product of the 30 month cycle, the Fed Funds rate vs. the 2yr yield, the potential for a US dollar rally, the US market’s acquisition of upside targets and even the constructive look of gold.
Well, we are entering the window and I tell you I am not overly confident that we will not get more of the same… wondrous rally activity in the face of the bearish potentials.
The first hint against the preferred view is the preponderance of ‘years ending in 7!’ hype pieces in the major and minor media. In my opinion, it is the laziest of analysis to extrapolate an oddity like that into market forecasts. Cycles, I can see. But the ‘ending in 7’ stuff is just a statistical novelty. That crap is bullish if it is anything, just as the ‘1929 analog’ chart, Fiscal Cliff and every other damned bearish thing proved bullish during this bull market.
But that was just a minor annoyance to me, if I am a defender of my market view, which I will not be (I’d admit it was wrong and move on). It is the likes of the Semiconductor index chart and its Symmetrical Triangle breakout that gives me pause as a would-be bear.
The Semis have led the bull run since early 2013 and I’ve been wondering why I am bullish on Intel but also carrying a bearish market view. Is this the answer? Part of the answer? A fake out? Stay tuned, but that is one bullish chart.
As for the counter-cyclical gold sector, we’ve noted that it has made some really good strides on the big picture and that still holds true, technically. But I will repeat to you until I am blue in the face that this ratio needs to break its bear market for gold mining to be a ‘go to’ sector. Last week GLD/SPY popped and this week it has dropped. This coming off of a positive divergence by MACD and RSI.
Just a little snapshot of some things going on this week that bear watching going forward. Maybe it will end as bull rallies often do, with an upside blow out, within the Q4 window. Maybe the gold sector will mark time during the process. Who knows for sure? But you can bet it’ll be interesting every step of the way. One thing’s for sure, I’m not shorting yet.
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