The view from here last week (July 18-22) was for turbulence by the middle of the week. I had some smaller degree square outs that were supposed to kick in by Tuesday/Wednesday. By Thursday we got some turbulence, but to this point it doesn’t appear like enough to kill the rally. Yet, it could remain in a period where markets possibly turn as we hit the end of 61 weeks off the S&P 500 highs from May 2015. It will remain this way until the middle of August because they will be at 55 weeks off the turn in July, which is an important secondary high in tech, but also the top at the end of June in the Russell 2000. This is a market that remains at high risk for more reasons than cycles.

Another week, another terror attack. Believe me when I tell you this is the last thing I want to talk about in a stock market column. I have so many good things working now with our new square out methodology that I’d rather focus on that, but one ignores geopolitical events at their own peril. It is my view we are witnessing a real time example of The Extraordinary Popular Delusion and the Madness of Crowds.

After rising on Thursday, the VIX dropped back again on Friday. Last week I told you the market behaves like a little kid who won’t take all of the news to heart until it becomes personal. How does it become personal to a mechanism like the market? Earnings will have to get bad or the perception of earnings getting bad will have to materialize. That can only happen when they wake up and the market usually wakes up at one of these time windows. We already know this from 1968--the last time we had this kind of social unrest--eventually the market woke up.

Last week the terrorist enemy hit the heart of the French Riviera and a key tourist area. This week they hit a McDonald’s and a shopping mall. Last year they hit a rock concert. What is left? But for the purposes of financial markets I wonder where the tipping point is. It seems like I’m referring to that Starbucks consumer behavior report too often for comfort. How many of these attacks have to happen before people really shut their wallets for good and stop going to concerts, café’s beaches, restaurants, sporting events and shopping malls?

Certainly, retail volume will be down as more people hunker down and stay home. Perhaps people will replace their brick and mortar shopping habits for good by going exclusively online. But I wonder how much of a hit the cumulative impact of all these attacks will have not only on earnings but GDP across the continent and the rest of the world. I don’t like saying this kind of stuff but it certainly is starting to feel like society is getting somewhat destabilized by all of this unrest. You know I’ve been talking about this kind of thing since the Ferguson riots. It’s amazing to me the markets have held up as long and as well as they have. But, as I said, the markets have not taken it personally yet.