Where is the bottom?

posted Dec 16, 2014, 9:20 AM by Katie Shook

This volatility is a little surprising.  Overnight — after the terrorist attack on a bunch of kids in Pakistan — has set the market on edge.  Futures dropped into the 1960′s briefly before climbing back to the 1980′s.  Either way, we’re testing further declines.  The systemic risk is on the rise and downward momentum (aka panic selling) seems to be picking up.  The question is, will there be another V bottom to this thing?

I don’t know.

The technical picture is still not ruined yet.  We’re above the 200-dma.  The DJIA is still above 17,000 (for now).  The trend isn't ‘broken’ — but this thing has fallen pretty fast.  Already the database has re-sold the SPX — talk about a whip-saw.  I suspect this will hinge on central bankers.  If the market believes rates are going to be forced to stay low for longer, we should see things resume higher.  If rates start changing — a la Russia and some emerging markets — bears may finally get their day.

It’s too early to say this thing is done.  The last week — and the dramatic decline in oil — is threatening to become contagious and muck up the works.  If the SPX falls below 1962 this thing could down-shift quickly.

Where’s our Santa Clause Rally?  So far the market seems to be on the naughty list.

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