There seems to be just a touch of negative sentiment in the air, which, together with profit-taking, have sent the markets heading down.
First, the positives: No matter who wins the U.S. election, the markets will go up. That seems to be the sentiment, confirmed by David Blitzer of Standard and Poors. Same sentiment was being expressed by Chief Analyst of Piper Jaffray some while ago, based on research into U.S. Presidential election years.
If Mitt Romney wins, then there's a "hoard of cash waiting to go into the markets" according to David Blitzer.
The economic data out of China suggested a soft landing, a happy picture, with the indicators moving upwards currently, meaning a saucer shaped upturn. The official China economist smiled benignly as he realeased this information.
Some people conjure up the negatives, with reference in the press and media to the Black Monday that happened 25 years ago. Well, the power lines are clear, communications to brokers have not broken or anything, you can still get pretty full coverage of news on TV and Internet, and the weather....well, it is mild. Some market participants would be happy for some Black Swan event, then their short bets would make a lot of money. It may or may not happen, I don't have a crystal ball, nor have I taken any position in the market, so I do not win or lose either way.
However, it is my belief that the DOW will head upwards, possibly heading for 13,700 plus towards the end of this month. Based on the natural trajectory to 15,000 by the end of the year, I start to believe Mitt Romney will win. I know it sounds absurd to say it like this, but markets and their likely technical movements most often foretell even natural events such as rivers flooding or earthquakes or tsunamis.
On the other hand, even perfect formation on the Ichimoku charts have been known to fail, such as happened at the time of the Fukushima disaster.
All in all, I believe in the positive picture, and the markets and the weather will probably reassure us all next week. I hope so anyway.