Waterfalling Wednesday – Down 5% in First 3 Days of 2016?

Down 5% already? 

This has been one ugly week already and we're only at the beginning of day 3!  Our Futures are, at the moment (8am), down almost 2% and, as you can see from the chart above, our major indexes were already down 3-4% so now we're testing our 5% lines across the board in the 5th session since 12/29, when I warned you that:

What you should, however, be concerned about is how FAKE the action was as it drove the McClellan Oscillator well into overbought territory.   The McClellan Oscillator is a breadth indicator derived from Net Advances, which is the number of advancing issues less the number of declining issues.  It's a momentum indicator, similar to MACD that gives us an idea of whether or not a rally is broad-based enough to be sustained and, clearly, this one isn't. 


What we have going on at the moment is good, old-fashioned window-dressing – aimed at painiting a picture of 2015 that will be sold to potential investors in 2016.  The brokers need you to put your money in the market so they can charge you fees – that's how the game is played and it really helps their sales pitch if the market wasn't negative the year before so all stops are pulled out to get us green at the end of the year…  

There's a whole lot of chasing going on as we close out 2015 – we're not chasing anything until we see how 2016 comes out of the gate.  For now, we remain "Cashy and Cautious" into the New Year. 

THIS (what is happening now) is exactly the kind of thing I am worried about when THAT (what happened last week) is going on.  Unfortunately, I will have to suggest that you also read last Wednesday's "Black Swan Preview" now that we are, in fact, plunging to our doom and perhaps take some of my 2016 concerns more seriously.

One date we were watching was Jan 8th, which was the day large shareholders were to begin to be able to sell stocks again over in China.  That date has been extended by 6-12 months in 30+ major firms this morning with more to follow in the next two days – that should help a bit…