The Closing Look

Stocks fell hard on Tuesday, giving back Monday’s rally, alongside other so-called “risk-on” markets. Oil prices plunged after the The International Energy Agency (IEA) reduced their outlook for oil in 2017. The IEA said the global economy is slowing down due to lackluster demand and supply remains very strong. That is a perfect recipe for lower prices. The IEA said the oil market will remain oversupplied for the first half of 2017. Stocks were smacked on Friday, rebounded on Monday, and fell hard on Tuesday. Clearly, the market environment has changed.

Gary’s Thoughts: All we know is that the 18 month base breakout on major indices are now close to being violated in a meaningful fashion. Currently, most are just below breakout levels. But as of this second, leave no doubt, a bunch of technical damage is being done. This in itself does not mean party over but it gives pause that 8 weeks of range was broken. On radio today, we stated 250 up tomorrow…of course, sarcasm. Lastly, since we believe Yellen only watches markets, this drop takes any chance of a hike off the table.