NOWHERE ELSE TO LOOK - If you're wondering why nothing is going on in the market right now, it is most probably because a good portion of participants are off on holiday. The last two weeks of August are always very thin and though this doesn't ensure we will remain confined to tight ranges, it could mean we don't see any real movement until September. Of course, it's no surprise that equities have been moving a bit. The S&P 500 has been doing its own thing for some time now and continues to find an unwavering commitment to keep it well supported on any dip. We have now retraced 78.6% of the move from the recent record high to low move. Still, I am of the opinion that the rally will not be sustained and we should see US equities once again pressured to the downside, with stocks to carve a meaningful top. The market has has attributed the bounce and renewed risk appetite to a deescalation of geopolitical risk, but this market is poised for a serious bearish reversal with out without geopolitical influence. So I wouldn't be so quick to assign the price action to geopolitics.
SOMETHING TO TALK ABOUT - Quite often, when a market is topping, we get some intense choppy trade that makes us doubt whether a reversal is actually playing out. But this is quite normal. At the moment, Friday's low in the S&P is the key level to watch, with a break below to confirm the bearish, topping bias. Elsewhere, there really isn't anything substantive to report. The Euro can't decide which way it wants to break, while all other major currencies consolidate. The Shekel on the other hand has been impressive, with the currency still under pressure and following through with projections of a few weeks back. I had been looking for relative underperformance here and we are finally seeing it play out. Finally, EUR/CHF popped back over 1.2100 after the market enjoyed a brief stint in the 1.2000's. However, I still think there is room for more weakness before we see some legitimate buying. As I have said, I like the idea of buying EUR/CHF towards SNB barriers at 1.2000.