An analytical cliffhanger is evoking all kinds of interpretations across the spectrum of market observers. The reality is it’s an ‘inside day’ consolidation suspected as the most likely Tuesday behavior, after Monday’s drama. And for sure; alternating Wednesday (Halloween) action promises to be spooky for both Bulls & Bears; and this ‘hollowed-out’ pumpkin of a market struggles to extend the rebound, and probably fades generally as outlined. But as we noted Monday night; there was increased negativity after breaking below a key ‘standard deviation’ lower band; so some sort of turnaround was likely. 

Both sessions do not confirm a bottom and secondary test (or similar action that can be construed as a low for the correction); though stranger patterns have and do occur in the market. One thing markets don’t often do is just ‘conform’ to preordained formulaic prescriptions telling ‘it’ how to bottom.  

In fact, when we’ve seen that, such as in February, as a precise low formed at a double-bottom within a couple days; I indeed called for a turn from the January top (crash alert) warning; for at least a trading-rally at the time. One reason was it was ‘too perfect’; hence I thought it was manufactured and so would temporarily succeed, whether it seemed logical or not. Here it seems logical; but it’s not exact, requires testing, and facing big known-unknowns. 

What we are seeing here isn’t exactly manufactured; and there are reasons for the wild swings and differing attitudes. My assessment of the action has simply been continuation of the 9 month ‘rolling bear market correction’ that I called ‘Rinse & Repeat’, with the FANG type stocks plunging ‘after’ the real broad market already had worked to much more attractive levels.  

I think I can summarize that by saying that ‘high wealth individuals’ were for the most part tracked as ‘sellers’ on the year’s earlier rallies; some foreign funds and others joined into the ‘stealth’ selling under-cover of a firm DJIA and S&P during the late Summer and early Fall. They are cash-rich just as we had advised; so have the liquidity to start nibbling at perceived value.