We thought a good correction could happen some time in the first quarter or so. We did not know it would happen in 5 trading days. But this is what you get when you have massive leverage (margin) that gets unwound as greed turns into fear quickly. This is what happens when the markets decide to shoot a certain finger back at the maniacal central banks who have created and enabled all this leverage (margin) with their assinine easy money that continues unabated. Again, margin is the best friend of a bull phase but the worst enemy of a bear phase. We are hearing a little too much that everything will be just fine. We hope they are right. Just recognize that while we now finally got a good correction, we still have not had a real bear in 9 years. On top of this, we now have to recognize how vicious the selling has been and that this type of selling does not lend itself to recover so easily. We also make note that world markets are also going along for the ride.
Markets are now about as oversold on a short term basis as we have seen in ages…the complete opposite of the overbought condition we saw in January. We could get a serious oversold bounce any day but it is not guaranteed. We would love to tell you we have a great edge here but can’t. The action will remain wild, remain random and drive you up a wall. Markets will gap up, making the masses feel better than gap down the next day, making the masses feel worse. We will get reversals of the reversals of the reversals.
The worry remains this is finally the asset bubble pop that Bernanke, Yellen, Kuroda, Draghi and the rest of the easy money nut jobs created…with the crypto-currency nonsense being the final straw. We have told you for years that they think they are heroes because markets obeyed their every move. But history dictates that all they are really good at is creating booms, which always turn into busts. But of course, the media is already blaming Trump. We hope we are wrong. We really do. But we are students of history. We remember 07-08 well as that was the outcome of easy money. We remember 2000-2003 well also. We are not saying the same thing has to happen. We are saying conditions are such that it is not out of the question. And this time, markets are working off of 8 years of 0% rates, the printing of (depending on which abacus you use) $15-20 trillion, with some countries still negative and still printing.
The pre-market is again not pretty. Futures are down markedly. We hope…no, we pray that the President recognizes how fragile things are and measures his words carefully. The same for his cabinet. We wanted to vomit last week when Mnuchin yapped about the dollar and did an about face hours later. You want a crappy market? Keep that up. If we were running the show, we would come out and say, “The economy is strong. Companies are doing well. Corrections are a normal course of markets.” AND THEN SHUT UP!
Lastly, technically, does not take a rocket scientist to tell  you things have broken down here. Most everything has broke below support/moving averages.  MORE TO COME!