Ball Is in the Bears' Court

 | Aug 11, 2017 | 4:25 PM EDT
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The highlight of the week for market players was some increased volatility. On Wednesday, there was a dip after some comments by President Trump about North Korea, but the dip buyers quickly jumped in and the indices traded close to unchanged.

On Thursday morning, the selling picked up again but mainly due to concerns about valuations and the economy. The selling accelerated into the close after Trump said that maybe he wasn't harsh enough in his comments about North Korea.

Thursday had the first real selling we have seen in a while and had many bears, including Doug Kass on Real Money Pro, declaring that the top was now in and a downtrend was about to begin. This correction has been well anticipated for quite some time. In view of the poor reaction to earnings this quarter and the fact that we are in the seasonally weakest time of the year, the setup for a pullback does seem quite strong.

Despite the alignment of the negatives, the bears were unable to gain further traction today. The indices held steady and breadth was almost dead even. The negative spin is that the bulls couldn't even manage a decent bounce, but it's the bears who need to prove they can produce some sustained momentum this time.

Earnings season is winding down and we are entering the slowest time of the year in the next few weeks as summer vacations come to an end. Technical conditions favor the bears at this point and there are few good setups in individual stocks, but the bulls have consistently come back when things look bleak so the pessimists shouldn't be too confident.

I'll be working on my shopping lists and rooting for more volatility next week.

Have a great weekend. I'll see you on Monday.

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