We waited all year for the markets to pull back and all we got was a lousy 50-point correction? This market is completely nuts and this morning the Futures already have us back at the 6,700 line on the Nasdaq (/NQ) along with 25,400 on the Dow (/YM), 2,756 on the S&P (/ES) and 1,565 on the Russell (/TF) while Oil (/CL) is testing $64 despite disappointing demand numbers in yesterday's inventory report.
Facts don't matter in this market – it's all about the momentum at this point and, tempting though it may be, we're not placing many bets against it though shorting /NQ Futures at 6,700 with tight stops above is a no-brainer – as it limits your losses but not your gains (see yesterday's Report). We took a poke short in yesterday's Live Trading Webinar but then decided long was a better play after losing $105 but now we're done with those and flipping short at the same(ish) levels we shorted on Tuesday afternoon.
We saw how quickly gains could evaportate yesterday but, if those weak retrace lines keep holding up, we may be consolidating for a breakout to new highs, rather than correcting from our New Year's rally. Yesterday's strong 10-year note auction alleviated fears in the bond market but that may have been because we sold $20Bn in debt at 2.6%, the highest level since last March. Today we sell $12Bn of 30-year notes at 1pm and we'll see how that goes.
One thing everyone seems to be ignorning is a warning from Moody's that Trump's tax plan has put the United States on Negative Credit Watch as they see it as detrimental to our economy overall, with at least $1.5Tn in additional deficits over the next 10 years (in addition to the $8Tn deficit that was already modeled in). According to Moody's: