The Market 'Stalemate' Will Come To An End One Way Or Another

Recommended Posts


Where is it? The great bull market? Where is the imminent great bear market? Fact is markets are engaged in a big game of stalemate. Bulls keep buying every dip, but all rallies are sold and are selling opportunities. Nobody’s making any progress whatsoever chasing from headline to headline that are associated with the various daily moves but accomplish previously little in the big scheme of things. That said one can’t shake the sense that this stalemate is soon coming to an end and October may well be the month that provides clarity.


Let’s look at the facts and risk factors.

On October 2, 2018 $DJIA made an all time high with a print of 26824. This past Friday, almost 1 year later, $DJIA closed at 26820. Virtually the same price.

On September 21, 2018 $SPX printed an all time high of 2940.91, last Friday’s intra-day low was 2945.53, both data points reflective of the nowhere state of affairs over the past year. That is on the surface. Underneath plenty of things have changed.

The longer the trade war drags on the worse the continued uncertainty will dampen investment and consumer sentiment and this is precisely what we’re seeing with global PMIs not showing any real improvements and consumer uncertainty approaching levels that risk that consumer spending may get negatively affected.

Whether the recent positive signals on trade were partially fueled by the Chinese’s desire to have a positive social mood for the upcoming 70 year celebration on October 1st remains to be seen. Like the rest of the world they are likely to closely watch the upcoming impeachment inquiry in the US. The US election is a mere 14 months away and the Chinese will want to assess the unfolding developments in their strategic assessment on how to proceed in their trade negotiation strategy.

Can things change rapidly? Conventional wisdom currently suggests that nothing much will change as Donald Trump’s continued support in the Senate is presumed and even is House Democrats were to impact him a Clinton like outcome would support a continued market rally into 2020.

The alternative being the unexpected Berlin Wall effect. Assumed to be the status quo for years sentiment suddenly changed out of the blue and the Berlin Wall was no more. A similar fate that Richard Nixon experienced when impeachment was initially not viewed as popular either by voters nor by Republicans, but then the tapes came out and 3 days later Nixon resigned knowing he lost support by Republicans.

None of us can know how events will unfold, but as we are rapidly approaching the 2020 elections history teaches that strong support can dwindle rapidly when new facts emerge hence they next few weeks may well be critical in determining whether the status quo remains or whether a new unexpected reality emerges.

Edited by DayTrader
  • Upvote 1

Share this post

Link to post
Share on other sites

Day Trader, are you playing with us? Bull markets end because of an oil supply/price shock. This time around, such a shock has been elusive. Soon, Grasshopper, soon. 

  • Haha 1

Share this post

Link to post
Share on other sites


@Gerry Maddoux  ??

LOL just an article about market direction.

Take from it what you wish. We will see next month. 

Ride the waves baby.

Soon, old man, soon.

Go back to sleep  :) 

Edited by DayTrader

Share this post

Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

You are posting as a guest. If you have an account, please sign in.
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.