Rampaging bulls were corralled – initially by expected limited follow-through to start-off Wednesday’s session; all inline with a phony upside December start. So in-line with our suspicion that Tuesday’s upside romp was likely a one-day-wonder short-squeeze; we moved to the short-side, notably with just a half hour of lateral behavior (2100-2102) easing implementing any sales or short-sales at the guideline suggested: E-mini / December S&P 2100 or even a hair higher. 

At no time Wednesday or Thursday did mental stop points get challenged, and so we nailed what became a huge (not record as you recall shakeouts caught earlier in 2015, and in August too; although this was among the fastest). For all normal investors this sure matters too; as we strenuously urged ‘not‘ investing or buying the narrative so prevalent on the Street to simply be more ‘selective’. Remember, in a serious stock market ‘hit’, they take the good and the bad; plus (the piano player?), and there’s a growing absence of bids especially when you get not only the Fed moving as suspected; but also continuing deterioration that ‘consumer spending’ throttling evidences. (That’s why I showed how VISA had lower consumer credit card charges all the way through ‘Black Friday’.) 

Now you hear the pundits suggesting this retrenchment is ‘terror fear related’; and what we’ve proven is that, while events exacerbate this, the downturn was well-entrenched before the recent spate of ‘radical Islamic extremist’ attacks. It was even defensive before Chair Yellen; a combination that allowed this gain on the downside. So even as mourning the losses in San Bernardino, we think the decline would evolve regardless; the overall pattern evolution was in-play. Yesterday when noting Citi coming to recognize the ‘realities’ we’ve pointed-out for some time, by suggesting a 65% odds of a ‘recession developing in 2016’; I pointed-out we’ve repeatedly contended that not only was the market on fumes but that ‘recession’ probably will be traced back to starting in July of this year; a time we thought the internals would peak (rebound) and markets start eroding, just as I began my July-August European journey.      

The point is today’s argument that spending might contract because of terror is generally a ‘cover’ for excessive pundit optimism, or managers defending their overly bullish posture; whereas revenue and earnings prospects were already on the wane; so sure, these barbarian interlopers do inhibit mass gatherings a bit; perhaps some shopping patterns; but the trends were already in-place. So, while there is a multiplier-effect from frequent assaults, and it’s seems brave to contend everyone will be as active and travel as often; the reality is a bit more timidity, or at-least situational awareness, on outings. It is amazing that citizens spirits recover quickly from attacks; but there already is more political fallout. It is incredible that some media persist in calling this a ‘mix’ of workplace violence (it’s not; appears more a target of convenience and maybe some antipathy, but not an act of impulsive rage, as this was clearly prepared and planned). Also so hard to understand why media keeps trying to be ‘politically correct’, when that seems to be of less importance, than grasping facts regardless how they fall.