TRY AND REMEMBER A TIME IN SEPTEMBER....
Although it is not a completely consistent pattern, there have certainly been some notable selloffs that have taken place in September both in stock and commodities.
Here is the EMINI SP 500 weekly chart. As you can see as we have moved up off the lows sharply here for the last 4 weeks, ADX has declined sharply. Generally speaking this is not a good thing, confirmation of a move like this should be at least starting. Often ADX can lag a bit due to how it is calculated, but this is too long of a lag in my view. We do know we have a very strong seasonal tendency for rallies to start in October as you can see with the blue line above. Our best scenario would be for a sharp decline down starting pretty soon, setting up what could be a great buying spot for stocks, and most likely commodities as well in OCTOBER.
The momentum oscillators do not have any sell signals in sight here so I think that will mean that if we do get a decline it will setup a buying spot. However, if we get one we will just have to watch it to see what transpires. Typically during an election cycle like this we would have a rally, and you can bet your sweet ... that Barry and his boys are pulling every string they can to drive this higher. If they could sell the story that what they are doing making us into Sweden is working as evidenced by a big stock rally, they might be able to con a few more dumb asses into voting them in. Normally interest rates declines are what prop these mid term rallies, and for the most part all fall rallies. However, they are so low already, how much lower can they move. I think the bullets that are available are more along the lines of manipulating the EMINI futures markets with buy programs. They have just been great at doing that, coming in just at the right time when volume is light and nobody else is buying. If I had to bet I would say those "mysterious" night session moves have in reality no mystery to them at all.
What I find interesting in the last couple of days can be seen on the next chart.
You can see that the 10 Year Notes tradee for the most part completely opposite of what the stock market does. However, notice when the relationship gets out of whack, the 10 year seems to lead the next stock market move. You can see in the first instance I have marked that while stocks were going up we got 3 good sized bars up, which then led to a quick drop in the stock market which is the purple line below the 10 year price. Then at the top you can see a couple of sharp down bars in the notes showed up while stocks were plunging and viola, a big stock rally. Now what we have currently is 3 consecutive up bars going in notes with stocks rising sharply. Might this mean we have a stock decline coming our way? I did find it odd while watching prices yesterday during the big stock rally, that the 10 Year stayed strong the whole day. That is a bit of an anamoly. Typically these two markets don't stay real strong together for too long.
Let's see what happens!