The Scenario is Unfolding

The Scene

While there is a lot fluff and articles coming out of CNBC and Bloomberg this morning, talk of why the 200 day average will hold, we stick with the short term view outlined the past two days that that level is a water shed and will be pierced this week.

The fact that wholesale  inventories were shown bloated this morning along with poor trade figures is more evidence of the tax cut buildout being a big factor pushing the markets higher since last September.

Facebook issues and the political scene unfolding are just more of the core background.

Monthly Data Big Picture

At points like this it may be of value to step back and look at monthly data and the three month window.  Back in October – December 2007 the range between the 3 month highs and lows was around 11 percent, the January-March 2018 range is 12 percent with two days remaining.

Also using monthly data and monthly RSI the bottom was reached at 18.  At the moment the Monthly RSI is sitting at a lofty 61, leaving a lot of room to the downside.

Update at 9:40 AM CDT

One should be aware that a big support factor at times like this can be the US Treasury’s Market Room which steps in at crucial times to try and stop declines. The support for the Dollar this morning has caught our attention.  We also see that the headline risk of ” First Quarterly Decline in Stock Prices in a long time” is something Mnuchin does not want to see.  Probably his fear is that he doesn’t want to be part of a slogan “Remember Steve” if the Donald freaks on a major stock market decline.  Significantly this morning in spite of the push up on the dollar the yield curve continues to flatten, the flattest since January 26th.