We are seeing some poor action this morning, with breadth running worse than three-to-one negative, and there are only about 150 new 12-month highs. This is a big shift in the small-caps, which led the market higher yesterday.
There was some weak economic news out of the U.K., and talk about the ECB raising interest rates if Brexit went smoothly, but there isn't an obvious catalyst for the selling. What is ironic is that it is easier for dip buyers to buy when there is an obvious news event than it is to buy when there isn't anything specific. Yesterday, there was the Comey news, which could have easily been spun as a market negative -- but it actually turned into an opportunity to buy the bearishness again.
I suspect that when this market does undergo a significant correction, there will not be any obvious trigger. Instead once the selling picks up, all the bearish arguments that hadn't mattered before will suddenly become important.
It is the price action that tends to drive the news -- and not the other way around. You can be certain that if the market closes weak today, there will be plenty of headlines with a very simple explanation for why it occurred. The real reason for market movement is always complex, but that doesn't work very well for the news media.
I'm still holding some Direxion Daily Small Cap Bear 3X ETF (TZA) and I've add some ProShares Ultrapro Short S&P500 (SPXU) , but I have plenty of room to add to that bearish bet in the future. I've taken a few stops and don't see anything much I want to buy at the moment.
This market has been consistently inconsistent so it is hard to believe that the bears can gain any sustained momentum. Nonetheless this is poor price action and there is little choice but to play some defense.