Stocks were able to nearly hold their ground with modest losses into the European close. They were rattled by the rather poor Non-Farm Payrolls Report, but especially by the escalating war of words over trade between the US and China. Trump could not resist answering the Chinese braggadocio about victory with another $100 Billion in tariffs.

About 1 PM the selling began to gain some momentum, and there was strong selling across a variety of companies that set some deeper lows. The Wall Street guys love to hold the market up until Europe and Asia go home.

Despite the large and broader losses there was still little actual panic in the markets although Treasuries and gold did catch somewhat of a safe haven bid. Take a look at the modest increase in the VIX. Traders just do not believe that the market is going to go off the rails and are still looking to buy dips.

Right now the SP 500 futures are in a broad ‘trading range’ with energetic swings between 2580 up to around 2680.It may be noteworthy that it is around the 2580 level that the SP 500 had gone parabolic in the second leg of the Trump election rally.

There is a similar situation in the NDX futures, with the index vacillating broadly between 6400 to somewhere around 6650. Again it may be noteworthy that it was around 6400 that the index went parabolic in the post Trump election bull rally.

This is where it went from ‘bull rally’ to ‘self-inflating bubble.’

I would suggest that the risk of a ‘crash’ is not great unless these lower bounds are broken, and panic selling sets in.Then we might see an NDX heading down to the old gap around 5460, with a similar target in the S&P 500 of 2470. That would make for a solid market break and correction.

But, and this is the heart of the matter, there would need to be a decisive break lower out of this speculative range, accompanied by higher volumes and safe haven buying in Treasuries and gold.

For gold a panic breakout above 1370 would bring on 1400, which if broken would target 1470. And we of course would see a much higher spike in the VIX.

I do not think that a ‘crash’ is probable at this time unless ‘something happens.’ But we are in a rather unstable market, made so by the bubble facilitating and abetting actions of the usual suspects.

I came into today holding gold and triple short ETFs. I did take down those short trades in the last hour. As for gold, I remain persuaded by the charts that it is coiling for a breakout that may become memorable. It is pretty messy when a long running commodity price fixing pool falls apart.

The problem with stocks is that it is a market that has lost its bearings between real world values and prices driven by easy money and a willful mispricing of risk.No doubt this is the result of years of corruption and deceit across many levels and will not be fixed easily because of the credibility trap

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