View From The Hill: Buyer Fatigue And Not Fear Of Rate Hikes Drives Markets Lower

While I certainly take pride in my market timing abilities, I have never attempted to make such a closely timed call and nor do I ever endeavor. On Thursday, I wrote of the market approaching an inflection point and being more vulnerable to a correction. In another article, I also noted that the percentage of S&P 500 components trading above their 50-day moving average was waning and underscored that as a market weighted index, a break in any of the current 9 mega-cap stocks disproportionately supporting the market could create a selloff and that is more or less what happened. With utmost humility, I hereby acknowledge the favor of the gods and leave it at that.

Perhaps even more important is why the market rout in stocks and bonds occurred. Some believe Jeff Gundlach, famed investor and founder of Doubleline Capital, responsible as he jawboned the possibility of a surprise rate hike in September. I am not among them. The likelihood of such is an extremely low probability as indicated by the price action in Fed Futures contracts and the global landscape of mixed economic data. Instead, whether one wishes to accept or not, the market doesn’t always need a legitimate reason to go up or down and it merely comes down to a matter of buyer or seller fatigue, by which I deem the former guilty as charged.

(Please see our exchange traded fund summary below for a capital markets performance analysis.)

ETF Market Performance: September 9, 2016