This Was No Ordinary Selloff

 | May 17, 2017 | 4:12 PM EDT
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The bears have long anticipated that Donald Trump's political battles would be a catalyst for a market selloff. Their wish was granted today as the market gapped down and trended lower all day following political drama involving Russia and James Comey.

The bears have not had much success building downside momentum, but the action today was not just a garden-variety selloff. The point loss was big, volume heavier and breadth extremely negative. We even closed near the lows.

There hasn't been a day like this since Sept. 9, 2016. However, if you look back at that day you will see that the market bounced back very sharply the next day but it eventually rolled over again and produced a low on the eve of the presidential election.

The bears have the edge now and they need to show they can do something with it. Momentum is on their side as there has been some technical damage. It isn't enough to kill the uptrend that has been in place since the election, but another day like this would do it.

The news media tend to generate some hysteria when we have this sort of point loss, but the lack of this sort of corrective action is what has made trading so difficult for many. We need more volatility and more ups and downs to create the really great opportunities. Some folks seem to think downtrends mean losing money, but that is not the case at all. The biggest bounces occur in bad markets and it is action like this that helps create the next crop of winners.

If you had long positions, you took some hits today, but it is the nature of the beast. Prepare for more downside but stay positive about longer-term prospects and you will do well.

Have a good evening. I'll see you tomorrow.

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