There is a certain repugnance attached to the current market that is being expressed in price action almost perfectly. Contrary to popular wisdom, the act of being disgusted with the financial markets doesn't necessarily have to be expressed through the outright liquidation of a stock portfolio. It can arguably be better expressed through frustrating price action that leaves both sides of the market furious at their inability to cope with current conditions. Welcome to the market of 2016.
This dynamic is nowhere better expressed than a look at the Nasdaq Composite, which is a symphony of degradation in psychology expressed with red and green bars.
There is no glory in battling such a colossal miscreation, only pain and regret. Fortunately, it seems that market participants have grasped this concept as the long-term put/call ratio is nearing points of fear only seen during severe economic contagion of one form or another in the past.
What is important to realize is that given both of the dynamics expressed above it will be impossible for market participants to correctly surmise when it is appropriate to become aggressively bullish again and stick to that position. The psychology of defeat expressed through complete frustration as revealed in the current price action will be looking to sell rallies just at the time they should be bought.
When it comes to the essence of what the markets are attempting to accomplish at this juncture this may be it. Positioning participants to consistently make the wrong move (sell stocks) during what will be a period of time when making that move will prove extremely costly due to the persistence of the uptrend that forms after this prolonged consolidation for the major market averages.
It is impossible to pinpoint when that move up will begin. I don't think it will be anytime between now and September. Sometime in Q4, possibly Q1 of 2017. In the meantime, there is more work to do in manipulating those easily manipulated so that the supply exists on the way up to satisfy the voracious appetite for stocks that is sure to develop.
