But maybe not this one.
The market took a hit five days ago when President Orangutan ordered the assassination of Arch Duke Ferdinand (Iranian Gen. Qassem Soleimani) in Iraq. That was a strategic strike mostly aimed at distracting the country from his impending impeachment trial (Trump’s, not Soleimanini’s), a violation of international law and practice, in other words an act of war. Over the weekend, the world held its breath waiting to see how Iran would respond.
Today, the Iranian response, or part of the response began, as Iran has been launching missiles into bases in Iraq where U.S. military forces are stationed.
If the overnight futures are any indication, the market is not pleased. As I write this the ES is down 40, the NQ down 130, the Dow futures are down more and 300 points. The market may recover during the night (after all, it is a bull, or at last count a bull in a blow off) if Tweeter can keep his Tweeter trap shut (when’s that ever happened?). But now it’s the world again holding its breath to see is the U.S. crank is going to crank up the conflict further.
This is how stupid accidental world wars can begin. See Barbara W. Tuchman’s history, “The Guns of August.”
Setting news aside for a moment…
After two highs below highs on the NYMO (short-term breadth), the important NYSI indicator (longer-term breadth) turned negative today giving a sell for tomorrow’s open (see the chart below).
Funny how news comes along to validate what the market internals have been saying all along.
I’ve been warning here that the rally, which began in early December, could be getting too exuberant for its own good, most recently in the post below — #MarketTiming – the Santa Claus rally goes crazy.
In addition, CNN Money’s “Fear and Greed” Index is at 89, coming down from 97 four days ago (it can’t go higher than 100) but still at an “extreme greed” level. It has a long way to fall.
For the record, on today’s close, the Nasdaq 3x-leveraged ETF, TQQQ, was up 16.5% in the 20 trading days of this rally; among leveraged sector ETFs TECL was up 17.6%, SOXL 25.1% and FNGU, which simulates the FANG stocks, was up 41.6% (this was primarily a tech rally). Notable stocks from my bellwether list include TSLA up 38.4% (remember, that’s in 20 trading days), SHOP up 13.3%, WYNN up 16.8%, and AMD up 22% – true evidence that the Santa rally did go crazy.
If this sell-off continues overnight into tomorrow’s open, all those above are going to get hit.
One last note, the leveraged energy-stock ETF, ERX, was up 19.3 and GUSH, the 3x-leveraged daily S&P Oil and Gas ETF from Direxion, was up 54.3%.
No matter what, oil and gas will still love a war.