Weekend Reading: Being Too Busy To Read

The past week has been fairly quiet as all eyes have turned to focus on the Fed and the expected rate hike at the December meeting. Will they, won’t they, should they or shouldn’t they? Those are the questions being hotly contested by the mainstream media on a daily basis.

Of course, the reality is the Federal Reserve faces the huge obstacle of weak global growth and deflationary pressures which could very well keep them on hold well into 2016. The potential loss of credibility in the Fed by the markets could be the bigger issue to be concerned with.

For now, we wait. The markets rapid surge in October has run into resistance as earnings season rapidly comes to an end. This is at a time when much of the economic data flow shows weakness and investors remain skittish following the summer bruising.

While the markets have entered into the “seasonally strong” time of year, there is a marked difference between the current market environment and that of either the 2010 or 2011 summer corrections. In fact, the current market action as discussed earlier this week, is more reminiscent of a market topping process rather than a simple correction within an ongoing bull market. To wit:

 There is little evidence currently that the rally over the last couple of months has done much to reverse the more “bearish” market signals that currently exist. Furthermore, as noted by Jochen Schmidt, the current market action may be more indicative of market topping process.”

@LanceRoberts
@FGWenner @bullandbearishm @KhaliBOUZIDI
@slangwise:
your chart shows the rounding top of #SPX! pic.twitter.com/QbFN8twmCm

— Jochen Schmidt (@_Pferdle) November 8, 2015

“Not unlike previous market topping action, the markets could indeed even register ‘new highs,’ as witnessed in both 2000 and 2007 before the major market correction begins. This is typically how ‘bull markets’ end by providing false signals and sucking in the last of those willing to ‘buy the top.’ The devastation comes soon after.”