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October's Shadow Casts its Pall
We did raise the specter of an October reversal being brought to bear on the markets and so far that seems to have been an unfolding scenario since Friday, when the markets began to lose their upward momentum and started to pull back some yesterday and into this morning. We would not rule out the markets propensity to suddenly turn on a dime and resume their September uptrends, we have seen this kind of action before, where the new month and or quarter can retest some of its upwards trajectory before resuming what was the original uptrend. But, in past instances and possibly this one too, the extent of such a pullback could be difficult to define and could last from a fleeting moment to a much more drawn out affair. In actuality, the amount of hype over the Dow trying to set a new all time record was bordering on the ridicule, when the more important broader indices that have driven US markets to new all time highs since 2003 hardly got a mention in comparison and is definitely a warning sign of sorts, given that only 10 stocks of a 30 stock index are making higher highs this time around, suggests to us a rather extreme narrowness to get excited about. However, on the more positive side, we do see tech as an improving barometer behind the veneer, as well as the potential continuing pockets of vibrancy within the economy and definitely feel that something akin to what occurred in 1999, which experienced a weak October, prior to one of the greatest rallies of all time, could be on the cards for this year: The broad difference being, that we feel the tone of the market from some point in this quarter could resume positive and actually extend out for a year or so hence, in what could be one of the best markets ever. However we have to get through some fairly rough patches first and that could be tough to endure, especially if this is the beginning of a 'C' wave correction of some magnitude, prior to what could be a significant new impulse wave to upside, that would definitely be much stronger in character than these most recent efforts.
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