What does that mean to the Tea Party and the politics of the right? If the mood of the crowd was despondent and eventually angry enough to move to the right as a result of the crash, the intensity of the anger has been somewhat diminished by a rising social mood as a result of a better stock market these past years. It’s my contention that had the stock market peaked in 2011 and not recovered or peaked in March and not recovered Romney would have a good lead right now and we’d be on the cusp of electing a new President in a few short weeks. But the bottom line is the rising stock market which is expressing a rising social mood is negating whatever serious teeth and momentum the Tea Party garnered during the debt ceiling debacle of August 2011. From what I can tell, the horrible correction of 2011 was the peak of Tea Party popularity. We had a better stock market and nobody decided to have another debt ceiling fight this year.
So why do we have an incumbent President on the verge of re-election with the unemployment rate over 8%? The likely answer is that we also have a stock market sitting at new highs.
Looking at these markets briefly, we are a month out from the major time windows and let me just say there is nothing set in stone that they should top in October but for the life of me I can’t see them ignoring a big time window when the VIX is likely to be as low as it is. In my work, the combination of time windows and sentiment is a lethal combination. The US Dollar broke down and is on the cusp of breaking down to 2011 lows. Copper finally broke out of the Andrews channel that has contained it since early last year. Even the SSE is attempting an important reversal. I don’t have a problem with a Copper breakout as long as it’s supported by a turnaround in China. On the chart of the week we see a major violation of the long term pitchfork which has dominated the Copper action since early last year. What is interesting about this chart is how the price action stayed in the upper portion of the pitchfork which means the underlying structure of this market might have been down but had some strength to it. In our work it means that sooner or later what is manifesting under the surface will manifest as a trend change.
At the end of the day the SPX and NDX have serious resistance right at current levels so if we see a break through last week’s highs the markets can continue to power up some more.