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[dTraderB]

Friday was down but with a bullish close, not a gloomy session; then came the weekend, up Sunday night, then a totally different tone on Monday as the perfect bear storm struck! 

Intense & heavy selling, is it now over? Not yet out of the woods but an attempt overnight to rally may be met with more heavy selling and revisiting SPX 2600 handles before it's all over. 

 

Why the perfect bear storm?

- Hedge Fund redemption, another day or two to go before that is over

- weaker stock buybacks

- Apple supplier signaled slow down in Apple sale.... tech wreck ensued

- Financial sector struggling, Goldman led the way down

- debt debt debt ...bond auction results 

- housing sector problems

 

- Politically, tweets galore. It did send crude down after an early rally - but that was the objective; however, sinking crude was one creason for selling equities, only logical since low oil prices are not good for stocks in that sector.

- Politically, there seems to be a strange melancholia in the White House, some think there will be announcements about probe etc. 

 

But, you will say, justifiably so, that most of these were present during the post-election rally, but the confluence of these and a sobering analysis of the election results after the relief rally has some people worried that there will basically be no real agenda during the next two years e.g. no infrastructure bill, tax cut etc

 

There is a bearish tone... this could last for a few days but I am looking for that rally into end of 2018.

SPX has to recapture the 200ma and market has to avoid the 50/200 ma death cross.... still away but could happen with a few down days.

 

I am FLAT in ST trading portfolio

Will be out for part of the day at meetings.

 

[LMF]

The US state economic charts from the Philadelphia Fed are not showing any problems now, compared to what it looked like around May 2008 when CA rolled into recession.  But the Fed definitely appears to be pushing it with the combination of rate hikes and the QE balance sheet reduction.  One of these would be ok but probably not both on a sustained basis.  They have no track record trying to do it like this.....easy stuff that a 3 year old could see.  And I think the Brexit derivatives issues are starting to come into view, where the markets are going to be hedged for a no-deal exit by March 29.  The problem is that nobody can tell ahead of time how bad the hard brexit is going to be with the derivatives, if it happens.  If anybody says they know, they don't.  This is going to take a defined exit plan by Q1 to relieve the uncertainty.....the EU continues to appear unable to make this happen.  Under normal circumstances, there's no way the markets should continue remain bearish going into the 3rd presidential year.  Uncertainty is a killer.....