The Word Here is Caution
Good Morning.
In my Daily Battle Plan for Wed Jan 29, I mentioned that in normal bull markets, days like Tuesday are followed by higher prices whereas in bear markets they reverse quickly. Even though SPY is still about six points from breaking under its 200 day ma, the behavior in the US is looking like the majority of the globe which are in full force bear markets.
There are a number of pieces occurring at the same time. More down days than up days, higher volatility, lack of follow-through, and reversals from higher globex overnight prices (yesterday’s was substantial) are all now weighing on a 5 year old bull market (that’s a long time) along with many countries that are seeing their markets getting pounded.
The word here is caution. As I mentioned to open the year, everyone was “all-in” on January 1. This pullback (4% and counting) is flushing out a lot of money. Whether the market bounces here or not should be secondary to taking added caution. There are now too many bigger picture signals to ignore otherwise.