So far this would appear today’s markets are appearing to be the start of something or nothing. It is too early to worry as the 50 DMA and 200 DMA are intact thus far.
However, the worry on CNBS and other business “news” networks was apparent when every bull that was hungover was asked to call in and use every cliche in the book to generate a bounce:
“buy the dips”
“get more tech stocks”
and my favorite to paraphrase, “don’t worry the Fed has the market’s back.”
Thus with Omicron now on the books, panic setting in all over Europe, 39 states in the US experiencing a new rise in cases of the China Virus as many predicted would happen, and an insanely over-extended market way past due for a pullback, odds are this will be the week a correction hits the markets hard (for the old timers, yes this means I’m going back out on my fishing trip later this week).
Hence look for political turmoil in the very near term. I do not think a debt ceiling deal nor the “Build Back Better” BS bills get done this week and the December 3rd deadline causes some minor chaos. The posturing and stupidity in DC is the last thing a spooked market needs and a test if not deep violation of the 50 day moving average would be logical; if not a kiss to the 200 day moving average.
The usual suspects will proclaim the Santa Claus rally the week after next when Pelosi, Schumer, and the Republicons divide up their spoils while raising the debt ceiling creating a bullish fake out and the suckers will dive back in as the rip your face off rally takes off.
But during the week of Christmas is when I think the bad news hits the markets really hard. Due to inventory shortages and supply chain issues, retail sales disappoint the markets. Add in the first case of the Botswana-Omicron-Fauci Booster Shot B.1.1.529 probably being detected in the United States and all hell will break loose into year end.
So enjoy your holiday. Make your dollar back with a wager from your best friend. And watch out when all of the rookies who have never experienced margin calls nor the inability to sell out of absurd options feel the pain of a true market crash.
It’s coming; a lot faster than anyone thinks.