Stock market sees technical, fundamental divergence

Stocks up but economy down...

In the bigger picture, when we connect the dots we end up with a possible wedge which still could have one more low to it. Is that the low that gets the equity market back to the highs of this year? The SPX is suddenly close enough.


This is likely to be the story of the week. If I’m not looking at too many issues, no worries as I think markets will be moving in slow motion in the near term. What that means to your trading is you need to take it slow and not get caught up in whipsaw patterns. Better you go to the beach.

Luckily this is an election year and we could spend a little time talking about sentiment and the psychology of what we are about to witness. You don’t need me to tell you the choice America faces is as split as it has ever been in my lifetime. Unfortunately, I think America might be as divided now as it has at any time since the Civil War. But the market is up for a reason. I think it’s trying to tell us something good. Nobody knows exactly what that is. But it was up before Romney picked Ryan so I doubt the market is telling us a Romney win is in the cards. It might be telling us that Obama is going to win.

Another thing I have to tell you is there are underlying whispers of two really bad news events. I hear lots of people talking about a stock market crash coming in October. I can somewhat dismiss it because when the market really does crash nobody is talking about it. But what really concerns me are reports that Syria is ready to shoot missiles at Israel. Here’s a report from an Israeli web site picked up by Twitter friend @thebarbecuemast: http://debka.com/article/22180/Israel-advised-to-brace-for-Syrian-missile-attack-%25E2%2580%2593-conventional-or-chemical. This is a wild card nobody seems to be watching. My Twitter friend tells me he believes its real and his logic is that he believes Assad is in serious trouble and similar to when Saddam Hussein was in real trouble in the first Gulf War, he took the opportunity to hit Israel. Nothing happened in the second Gulf War so I don’t know.

What I do know is you can never rule out a conflict, and in February 2011 markets topped on the start of the new Arab Spring. The dichotomy is that while everything appears to be tranquil with the Olympics wrapping up with peace on Earth and everyone pointing to the convention season, nobody is really considering the possibility of a war. That’s why I’ll consider it. If you are wondering what could possibly interrupt this summer feel good period, this would be it. 

Nobody knows if this will happen. But if you peruse that web site you’ll see another report that the United States takes the threat seriously. A slow week -- or month -- for the markets can suddenly turn into something important and historic.

dollar, technical, analysis, greenback, forex

About the Author
Jeff Greenblatt

Jeff Greenblatt is the author of Breakthrough Strategies For Predicting Any Market, editor of the Fibonacci Forecaster, director of Lucas Wave International, LLC. and a private trader for the past eight years.

Lucas Wave International (https://www.lucaswaveinternational.com) provides forecasts of financial markets via the Fibonacci Forecaster and other reports. The company provides coaching/seminars to teach traders around the world about this cutting edge methodology.

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