Emotion Is Missing From Market

 | Aug 09, 2017 | 2:17 PM EDT
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Stock quotes in this article:

IWM

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QQQ

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TZA

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spxs

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spxs

Many market players are so tired of the low level of volatility that they are disappointed today that there wasn't a stronger reaction to President Trump's comments about North Korea. In most situations, hints about the potential for war would generate a stronger market reaction, but this market hasn't been normal for a long time nor has it dealt with presidential politics like those surrounding Donald Trump.

In the "old" days, fear and greed moved the market, but these days those emotions seem antiquated and irrelevant. Market action is viewed through the lens of mathematical formulas that have little regard for the worries of human beings.

While the "buy the dip" trade worked again, it has not been very energetic action. The Russell 2000 ETF (IWM) is just slightly off its early lows while the Nasdaq-100 (QQQ) has performed better because dip buyers tend to prefer bigger-cap names on a day like this.

It is not an impressive bounce and it raises the question of how strong support really is. There may be buyers willing to buy the dip, but they aren't as willing to chase. They are short-term players who are flipping into strength.

We will see how we close today, but my inclination is to build some index shorts. I'm already holding some Direxion Daily S&P 500 Bear 3x (SPXS) and Direxion Small Cap Bear 3x (TZA) and will look to expand that further on a weakish close. I see no individual stocks of particular interest and don't expect to until there is better corrective action.

This market may find some support, but it doesn't have any positive catalysts to propel it higher at this point.

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