With Bannon out questions remain whether his departure will mollify the opposition, repair political damage to the administration and restore the market's confidence in promised legislation.  I'm sure to the hard-core obstructionists this will mean little. They will point a bit to the comparable views of both Bannon and Trump (we think that's more limited; but again it's what the perception will be that matters to markets). At the same time I have contended those arguing this market is about earnings, or much other than Trump's prospects for success, were and are incorrect. 

So some say there was a 'Cohn premium' and 'Bannon discount' in markets; and a ridiculous assumption that #war from Breitbart meant political chaos. Of course you may get more turmoil (almost ensured even if a retreat or tiny contrition move comes from the President); but it won't be from the hashtag of Breitbart; which always uses that tag. Again media made more of it than it was; which is not to endorse anything or everything they say but just noting a tendency to grab on anything that can be spun as more controversial. 

Speaking of 'center'; this is not where the stock market is. We had a topping formation unfold for a long time; with a huge number of stocks swinging with patterns well below their 200-day Moving Averages. Technically, everything for the most part supports my view that the internal rotating top began from March 1 forward; and has nothing to do with the small universe of stocks that did the heavy lifting during the late upside phases that masked a broad distribution that has been ongoing for months.  

The market has shown that in the last couple weeks, and now again, in both directions. Ideas that the new Chief of Staff Kelly, or others, might help the White House start to better pass the 'smell test' does matter and has been in my view clear for awhile. To wit: anything that derails the President's core economic agenda is worrisome for business and markets; whereas anything that stabilizes prospects of key elements of that agenda coming to fruition in the months ahead, helps to maintain the optimism looking forward. 

What it may not do is hold the market up sufficiently to avoid the continuing rotational correction that has prevailed in the broad market, really since just about March as noted, while a small universe of stocks did the heavy lifting to maintain the illusion of strength going forward from then..

Bannon (and Trump) are serious economic protectionists. Most people who know them are aware they're sort of anti-globalist, but fiercely protectioist in respect to getting the United States cooking again in more substantial ways. Most people who actually know either or both of these guys say they are not bigots or racists and have diverted from the economic message that's been lost in the winds of political upheaval and efforts by some to stir things up. 

What this does is really compel Congress to embrace a heavy docket when the recess ends and of course, obstructionists actually want nothing done. It may be a reason they focus (excessively or not) on social issues that matter but will not relate to growing household income; or may even retard growth. And yes, Trump contributed to digger the hole deeper by wading into topics he really wasn't up to speed on, and needed to defer. Now we'll see if there is a coordinated reconciliation with the country after the President meets at Camp David with VP Pence; and they probably chart the course forward. 

If there's a single more definitive market impediment for Monday, barring an exciting statement from the President or conflict tension regenerated with N. Korea, it might be Carl Icahn backing away from Trump late on Friday. By all means recall his departure (and bullish pronouncement) at the Waldorf upon the election of 'his friend' Trump. That was a part of my 1:30 am report that night; about buying any pullbacks as how bullish Trump's election would be. 

Bottom line, the problem for Bulls of course is that they've generally held to the fiction of robust economic and job growth (without differentiating); and at this point are late to acknowledge the ongoing internal distribution really for most stocks since early March, on a rotational basis. 

Now you have Icahn departing too, likely well 'after' cutting back exposure to the market; as we've also described for some time. Many variables we have frequently discussed and do so again below and via the video. Barring real dramatic moves by the President before Monday;,we'll see more downside and then a rebound effort, likely within context of the overall decline.