Exhausting Possibilities

Inspector Richard: You're not too tired?
Jessica Kamen: Oh yeah, for sure. I could probably sleep for a week.
--Kiss of the Dragon

Domestic stock markets lost a couple of percent yesterday. Popular cause assigned to the slippage was the turmoil in Washington.

While Trump and the hysteria that he sponsors might help ignite selling, the truth is that this is a market has been operating under its own manic brand for quite some time. When that mania exhausts itself, then any news can reverse the trend. And once the trend is reversed, all news will be seen as bad by market participants.

Whether yesterday constituted the 'this is it' moment remains to be seen. Note that a down day of similar magnitude back in mid-March fostered no material follow-on effect.

Technically, yesterday's decline did no significant damage, and markets are bouncing moderately this morning after opening slightly red. Bears, who have been in hibernation for months (years?), will need more than yesterday's action to crawl out of their caves in size.

no positions