When a market is in a trading range it doesn't need a good reason to sell-off. While there was some worries about moves that President Trump might make over the weekend as far as Syria or Deputy Attorney General Rod Rosenstein, the main reason the indices sold off was that there was a 'sell the news' reaction to the earnings reports from JPMorgan Chase (JPM) , Citigroup (C) and Wells Fargo (WFC) .
The three reports were solid and had the bulls excited before the open, but it was a classic 'sell the news' reaction. Banks have been a bit of a safe haven recently as money has piled into the group on the simplistic notion that higher interest rates will be good for financials. Maybe so but that thinking helped to trigger the reaction to the banks today.
Another worry today is the possibility that Syria will be bombed over the weekend. There seems to be quite a bit of support for that move but it doesn't make sense that the market will view it as a negative event. As I've said, the great likelihood is that if the market were to open weak on Monday due to bombing the dip buyers would likely have it in the green before very long.
The main issue right now is that the market is in a trading range. The bulls and bears are battling back and forth and neither is able to gain firm control of the action. Next week we will have quite a few earnings reports that will be used as ammunition in the war but, after the banks today, you have worry about what sort of reports are needed to generate some positive momentum.
I've mentioned that it is important to understand what the 'theme' of earnings is for the quarter. It has only been one day so far but the theme is obviously 'sell the news.' Will the bulls have the juice to change that tune?
Have a great weekend. I'll see you on Monday.