In a different market the tariffs directed at China and the pork-laden spending bill might not matter that much. Today they mattered a lot, but that is because the indices were already at a tipping point and this news shoved the bulls off the cliff.
I wrote in my opening post this morning that we were teetering on the brink of the abyss. It didn't matter that the FOMC interest rate decision was given a dovish spin by the media and bonds were trading up. What mattered was that the bias was to the downside and the news flow fulfilled the bearish narrative.
The issue now is how much lower can the indices go? The 2700 level of the S&P 500 offered no support at all and the support at 2650 is weak at best. The next stop is the closing low in February of 2580 which is also the 200-day moving average.
The bears have consistently had issues generating downside momentum. Just when it looks like they are finally gaining traction the market will bounce and make a V-shaped recovery. It happened after the dramatic February fall and it happened again after the small pullback at the end of the month. You can be sure there are plenty of bulls anticipating another such recovery sooner or later.
For now the best move is to get out of the way and let the selling play out. Ultimately this is the sort of action that always leads to some great trading, but it is all about the timing. Overall many small-caps showed some relative strength but it was the big-cap FAANG -- Facebook (FB) , Amazon (AMZN) , Apple (AAPL) , Netflix (NFLX) and Alphabet (GOOGL) -- names that caused the most pain and those are so overowned that when they are sick the whole market catches the flu.
This is ugly stuff today but it should make you optimistic about the trading that lies ahead.
Have a good evening. I'll see you tomorrow.