Saturday, July 28, 2007
Fear Ahead! - U.S. Markets and Mood - August 2007
The mood in general this month is again very gray, almost despondent. What should keep the stock market from completely crashing is the general lack of energy. The biggest danger is the lack of anchor in facts or anything that has to do with "reality." Just like being alone in the deep woods late at night, the slightest creek or crackle can cause incredible panic as the collective imagination runs wild with ferocious beasts, goblins, and monsters. The U.S. government does its best with smooth talking and placating sounds to try to veer away from fears of impending recession. The most likely response from the government to perceived pressure is secrecy, manipulation of social mood, and new constrictive regulations, especially towards the end of the month. From the U.S. perspective, the rest of the world looks pretty sinister, and like a powder keg that could explode into chaos at any moment. The dollar looks unusually strong this month. European currencies and commodities should continue their decline. Crude oil is showing extremely high ambiguity which could manifest as high volatility, but little overall progress in any particular direction.
August 1-10 - ClimaxThe most notable thing early in the month should be highs in overbought markets and lows in the oversold. This is a period of peaks and valleys; markets should be ready to do an about face. Look for "blow-offs" and other tell-tale signs of trend climax.
Week of August 13 - TranquilityThe general mood is indicative of a calming of fears, even relief. The stock market should be making a good attempt at recovery (even if slow). Crude oil should be dropping substantially as the bogeymen that have been propping up the market fail to materialize.
Week of August 20 - EnlightenmentAn epiphany this week should make ambiguities in the markets that have lacked a good sense of direction turn to clarity. It may be another week or two before society in general understands the full implications of this week's events. There is a coming together of mood factors for the U.S. government, the rest of the world, and the factors that influence the price of oil and commodities. However this manifests, it should be interesting.
Week of August 26 - AccelerationThe markets pick up speed (even if down) to end the month off with a loud thud. This may be one of those weeks where the only "market" going up is the U.S. dollar.