Hurricanes and Hydrogen Bombs Don't Bother This Market

 | Sep 08, 2017 | 4:19 PM EDT
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The major indices lost ground this week but considering the news flow it was a very mild reaction. We started off with another North Korean nuclear bomb test and the most costly hurricane in history that hit Houston. We finished up waiting for what may be an even more costly hurricane but the market traded flat and exhibited little emotion.

The lack of volatility is nothing new, but it presents a challenge for market players who are looking for the market to react to significant headlines. Nothing seems to cause any real emotion and when there is a response, the computer algorithms arbitrage it away very quickly.

It is understandable that many bears believe that the market is on the brink of a breakdown, but maybe because there are so many that feel that way it is preventing it from occurring. There were some positives this week as the Trump administration dealt with the debt ceiling issue in the short term and focused on pushing tax reform before the end of the year. In addition central bankers have been taking a dovish tone lately, which is reflected in falling bond yields.

Given the uncertainty of what will happen with the hurricane in Florida over the weekend, the market has held up very well. What is it going to take to cause market players to flee this market? Nuclear bombs and natural disasters are shrugged off and the chaos of President Trump seems to be celebrated.

I don't know the answer to that question so I will stay focused on price action and let that be my guide. It will tell us when it is time to worry. Right now, it can't quite decide.

Have a great weekend and stay safe down in Florida. I will see you on Monday.

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