Overwhelming defensive fears combined with weak oil, to deliver Friday defensive, if indecisive, behavior, very much in line with our idea of fake-out nominal moves above the 50-Day. These have minimal sustainability since they are primarily a series of short squeezes, which never warrant the 'hurry what do we buy' stock market pitches that come right-back to the fore after each such breakdown. This market is pretty-much nervously 'still on-hold'. 

Of course three major pieces of Legislation are possibly forthcoming in the week ahead and that weighed on the trading swings this week (rapidly and in both directions on Friday), which we'll touch upon a bit more later. 

In a sense what they're missing is that this is a prolonged equity distribution process; which 'high-wealth' and hedge-fund behavior anticipated (the latter reflecting a mostly poor performance for months, because they positioned for a Trump defeat, not bump of the magnitude we looked for 'if' he won). 

Yes, we have pointed-out for months that the advance was predicated, as a market will do, on anticipation of 'Legislation, Enactment, and then of course Implementation' of pro-growth policies to further rejuvenate overall growth. I have shown many charts displaying 'disconnects' between the 'real' normal household incomes and ongoing sluggish business behavior, and of course the robust market action which presumes growth progress is forthcoming. 

My view was and remains that robust action was a 'discounting mechanism' for growth reform and initiatives; with the equity market over the last couple months essentially having 'priced in' those coming policies, pending actually getting the results. The entire late February to now view was seen as 'fade the rallies' time, rather than buy the dips that prevailed from early November until then. Investors increasingly grasp that restructuring precedes profits. It simply suggests that the 'normal' anticipation rally needs 'factual' follow-thru to keep it alive, or at least to mitigate against substantial corrective action.  

Throughout recent weeks or months I referred to the March (speech) peak; a faltering secondary test of the projected rally in response to the Fed hike of interest rates (many thought markets would decline on a hike; we thought nope, would go up and then you fade it); and subsequent more feeble rallies that wouldn't be sustainable, resulting in weakness particularly in April-May.  

If the implementation is delayed; then corrective action will be deeper. If we in fact get legislative moves 'next week' on healthcare that will create yet another 'bump'. But again, much of this is priced into the market so serious prospects for another entire leg up upon such developments are minuscule.

In sum

Recent rebounds following tentative breakdowns below technical or S&P supports, were greeted by renewed selling; less so (in both directions) for the NASDAQ market although it is vulnerable to oil and tech stock action.

These moves have all occurred within a general range that has been mostly a 'process' of lightening-up and hoarding cash, as investors await better buy points, and resist the clarion calls to invest at what are bloated price levels.

It's also part of why I thought credit markets would remain fairly stable, with interest rates and bond markets not a problem as of yet as they also reflect ongoing semi-recessionary states of the economy few wish to acknowledge.

Bottom line

Neither the Wednesday drubbing or the Thursday rebound got follow through and that was the expectation. Likewise we thought Friday's odds were defensiveness ahead of a political and perhaps even military weekend. The latest North Korean ' weekend army event' scare tactic denotes this. (It has been noticed on this Saturday afternoon, that North Korea has stopped pumping water out of the nuclear site; which is something that would occur if a test is imminently forthcoming. Let's hope they resist elevating tensions.)

Weekend (final) MarketCast
         
Near-close (intraday summary) MarketCast