Conclusions

Stock indices have begun to consolidate following the two-month 18% rally off the lows for SPX. It’s not expected that lows will be tested right away and dips should be buyable after 50% retracement for a push back higher into mid-September
Sentiment remains largely offsides with low equity exposure among Leveraged asset Managers while Long-Only Managers maintain high cash levels, hoping for pullbacks to put money to work
Cycles show choppiness and possible weakness in late September into October, though a positive path for US Equities between October-December
Treasury Yields have broken out and turning back towards June highs, directly coinciding with Equity weakness. This backing up in yields likely persists until October ahead of a Treasury rally/yields weakening into late 2022
US Dollar index rally still ongoing and most cycles show a possible late Sept/Oct peak which likely coincides with the first meaningful 2022 pullback for DXY
Commodities likely weaken further in September, and remains early to buy dips, but this might materialize in October
Cryptocurrencies have backtracked lately similar to Equities over the last week. Dips look buyable into late August for rallies into November

Indicators

Cycle projections show prices heading higher into mid-September. Any weakness likely proves minor and should be over by September 1
Technology and Growth outperformance from May lows is seen as constructive but requires Treasury yields to start rolling over again which is likely October-December given cycles and poorer Economic data
Breadth and momentum improvement in July looked strong enough with > 90% of SPX names above 50-day m.a. to cushion markets on Fall weakness
SPX Advance/Decline back at new highs should be a positive
Elliott-wave shows this as a possible triangle pattern which began in June. However, this doesn’t require an immediate retest/break of June lows
US Treasury yields and US Dollar both look close to making meaningful intermediate-term peaks and should trend lower October-December
Sentiment polls and positioning show bearishness to be still elevated, despite some mild improvement since June (AAII, Investors Intelligence)
Mid-term Election year tendencies show markets typically turning higher after bottoming in June/July. While September is a weak Mid-term election year month, October-December are quite bullish

Please see pdf for full outlook.