Tuesday -- Bounce Mode Continues Amid Surprising Disappointment

S&P E-mini Futures:
New lows overnight, and new highs.

News:
For me, one of the most effective uses of Elliott wave theory is the use of Wave Personality to describe market psychology.

Guess what the personality of Wave 4 is (where I still think the market is)?

"Surprising disappointment" -- from p. 78-79 of Frost & Prechter's Elliott Wave Principle.

Yesterday JP Morgan showed some surprising disappointment.

Today RBS did.

RBS cries 'sell everything' as deflationary crisis nears

"Clients told to seek safety of Bunds and Treasuries. 'This is about return of capital, not return on capital. In a crowded hall, exit doors are small'"

And Marketwatch added yet more.

I have no doubt that stocks are nowhere near cheap. But if journalists are shrewd enough to detect panic selling, maybe it's already gone far enough.

Maybe. Maybe not

In other words, it continues to feel like a Reboot.

Market wise, another weak night in Asia, followed by more bounce mode in Europe. Feels like the China effect is fading. Another non-narrative.

FX:
It seems to be the yen again. It continues to bounce when and where it should. Possibly the most important leading indicator out there.

Treasuries:
Still feeling the most shaky of all. Something feels wrong here. Wondering if the bond market is starting to wake up to the fact that the Fed has lost its illusion of control.

Energy:
WTI fresh lows. NG backing down.

I still remain constructive on oil over the medium term.

Metals:
Gold, silver, and copper down in unison.

S&P Outlook:
Bounce mode continues as yesterday saw two of them. The first failed, the second held, then futures hit a new low overnight yet rallied back to hit new highs.

Such a jerkfest could mean a real low is not quite in yet, or just par for the course when considering the amount of bearishness currently.

Ideally, if a low is in, a close above the 1960 area is needed. But the best level to reclaim is 1989.68.

To the downside, another retest of 1900, or slightly lower coupled with an intraday reversal, could be in order. Not sure if shorts have begun to cover yet.

Still seeing a ton of divergence, yet ticks may need to show more of it at a marginal new low to signal selling exhaustion.

One caveat is that the broader indexes such as the NYSE Composite and the Wilshire 5000 are much weaker than the S&P 500, the Dow Jones Industrials, and the NASDAQ, and are trading more in sympathy with the Russell 2000 which looks pretty bad.

However, there too, the corrective set up is there for lower prices to soon conclude with implications for new all-time highs.