In the midst of dissecting the short-term swings in the market, it's easy to forget to zoom out in order to properly interpret the wider message that the markets are sending through their behavior.
In what is not too different a practice as a clinical psychologist who sees patients go through various stages of emotion, market observers must look beneath the layers of obvious, overt behavior, into the deeper message that the behavior is sending.
Over the past few weeks, the markets have become astoundingly symmetrical in their behavior. What does this mean exactly?
The markets are simply following the technical markers in the ground to absolute precision. Road signs dictate the direction of the mindless driver.
But that's not good enough. So what if the markets are following technical markers. What's the overall message?
Here is the answer: When markets behave in a precise symmetrical manner it often means that they are without any type of fundamental foundation with which to put together a substantive, quality move. They are simply directionless, floating about waiting for something to assist in giving it a push to find an ultimate direction.
After the mental decapitation investors have faced during the first half of this year as a result of a schizophrenic news flow, it's no wonder the markets have basically gone limp. Everyone is tired.
And that's very simply where the markets are presently. Zenolytics has been talking about a sideways, choppy summer for sometime now. The market isn't telling investors anything to make them believe that this won't be the case. In fact, it's reiterating the fact that sideways and choppy is where it's comfortable right now.
It will be a traders dream and an investors nightmare.
If you're a trader, sharpen your tools and grab a cold brew. If you're an investor, play checkers at the park until September. That's the bottom line.
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