There is always a mix of positive and negative actions in society, but their quantity and intensity vary with social mood.
Applying Socionomics
And that is where we are now. Consider these simultaneous events.
British PM Truss quits after 45 days.
Higher interest rates slow home sales but American Airlines sees travel increase.
Short sellers bet on lower energy stock prices but Goldman Sachs predicts Brent to return to $115 from its current $92.
Stocks rally hundreds of DJIA points after falling 20% this year.
We believe the primary trend in the stock market is down and will be for some time. But the number of new lows to new highs reached previous levels where computer generated buy programs kicked in. This explains multiple hundred point moves in recent days. The percent of NYSE shares in bullish position bottomed at 17.5%, again a position that generated past rallies. Finally, our most reliable indicator the NYSE Advance Decline line also is over sold to the point of attracting some new money.
The chart pattern for the DJIA looks remarkably similar to 2007-2008. If this pattern continues, we should see a substantial decline after the election. No doubt the Democrats will blame this on a Republican victory. But by then the bear market will be one year old.
Friday, stocks needed a weekly close over 30,500 to project a move to 32,000 for the Dow Industrials. The 200 day moving average (MA) is now at 32,745 and that may be an extended target. We last hit that MA in mid-August. This should take us into the time of the mid-term elections, say November 2-9. Then we can re-calibrate the next move which is likely a resumption of the downtrend.
West Texas Intermediate Crude (WTIC) last peaked at $123 in June. It has been in decline since. A corrective rally began in late September. So far we have a leg up near $95 a leg down to $82, and are now in a final third wave up. The 200 day MA for this commodity is $97.48 which again makes for a good target. Gasoline futures, without the federal taxes, are now $2.47. The 200 day MA for gasoline is $3.04.
There is still no widespread realization that an extended bear market has begun. But a survey of round the world street protests in Belgium, France, Germany, and Iran speaks to world unrest, add any country in South America to the mix. Russian men are fleeing conscription in Putin’s sputtering war in the Ukraine. Xi’s China continues its crackdown on any dissident with Soviet style monitoring of all citizens.
Negative social mood is driving world markets lower, not the mid-term elections.
