Market Briefing For Friday, Sept. 15

Persistent bearish perspectives have crippled a fair number of the large hedge funds over the months (especially immediately after Trump's election) and even though many are confused politically by his flip-flopping this fails to significantly 'bear' the market, at least so far.

To us this is not a reason for complacency but a reflection of the rotational correction ongoing since March, with the S&P hanging-out near the 2500 level now, which seems about all that can even be rationalized, barring an actual tax-cut/reform package, which so far is, at best, in the wings.

While this occurs the failure of some 'often bullish' new bears this year to at all prevail makes others reticent to short the market or turn too dour. Even a prominent bank or two has turned negative prematurely beyond merely a raising of cash at the same time as a couple big managers bragged about having huge Put positions in the SPY; which incidentally didn't work out, as of course the clock is always ticking with options.

As time degradation goes forward the risks actually increase now because a somewhat revived overbought condition gets reestablished, with relatively skittish money managers less willing to be heroic and stand in its path. That can be a setup for new risk to actually start to appear.

Daily action was solid but not robust on Thursday and may try to extend a bit on Friday; but profit-taking later in the session wouldn't be surprising. We have essentially been neutral with a bias for selling rallies to build cash but not shorting. And we're still waiting to at least briefly hit and surpass the S&P 2500 level, which (barring anything overnight) I'd expect immediately. Now sustaining that is another story as I suspect it will be on a short fuse.