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Just about the time you think the new Administration is going to really shake things up in D.C. and the bulls are gonna "keep on rockin in the free world" (hat tip to Messrs Young, Vedder, McCready, Gossard, and Ament for one of the best performances ever), Mexico and the immigration order happened. And then Greece happened. (Yes again.) And finally, as you might expect by now, the high speed technicians happened. Whoosh, the day was on.

Don't look now fans, but after a pretty decent string of good stuff coming out of the White House (well, good for the stock market, anyway), Trump & Co. appear to have bonked hard on this immigration thing.

It looks like offering no warning and then issuing an executive order on who can and can't enter the country - leaving a lot of non-terrorist types stranded in airports in the process - is frowned upon by an awful lot of people. Some high powered businessmen based in Silicon Valley voiced their opinions publicly. German officials (as in Angela Merkel) chimed in. The U.K.'s Theresa May, who happens to be trying to cut a deal with Mr. Trump, disagreed with the approach. Heck, even Canada was heard from, via Twitter, of course! Oh, and then there were a whole bunch of folks who decided to walk around in circles outside airports while carrying signs.

To say that the action and then the reaction got people's attention is an understatement. Stocks sank overseas. And when the opening bell rang at the corner of Broad and Wall (or more accurately, as the millisecond clock struck 09:30:00 in Mahwah New Jersey), "risk off" became the phrase of the day in the early going.

While the decline didn't last long, the venerable DJIA did find itself down more than 220 points within 90 minutes of the open. The streaming headlines on TV called it the worst day of 2017 (which, of course, isn't saying much when the calendar year isn't even 20 trading days old yet). And as the red numbers began to pile up, it felt like the bad old days might be returning.

You see, there was more going on in the market than the public frustration over immigrants from seven primarily Muslim countries. So, first, there was Trump. Then there was Greece. And then there were the technicals. Talk about lions and tigers and bears!

Not Again

Believe it or not, Greece appeared to be a problem for the stock market again yesterday. It turns out that the EU is talking about holding up the next tranche of emergency bailout cash to the financial quagmire that is Greece. This after a Bloomberg report said the IMF referred to Greece's finances as "fundamentally inefficient, unfair, and ultimately socially unsustainable."

For those keeping score at home, you may recall that the IMF had bailed on the Greek bailout game a while back and this memo didn't exactly offer hope that the IMF might change their stance. Now factor in reports that Germany has said that failure to bring the IMF back into the mix would result in a new round of agreements and approvals by EU parliaments. And we all know how well voting to spend more money bailing out Greece's hugely irresponsible spending is going to go, right?

Everybody's a Technician These Days

Then there was the technical action. Remember, EVERYBODY is a market technician these days. And EVERY single trading idea ever thought up has now been coded into machines that execute orders at nearly the speed of light. So, with an overbought condition, another gap on the charts, talk of an "island reversal," stretched valuations, and a market that was starting to look sick, one couldn't be blamed for thinking that an important turn might be unfolding or for trying to remember where they'd left that darn crash helmet.

But speaking of technical action, it is important to note that after a couple hours of sideways action through the lunch hour, traders apparently began to question whether or not the bears had actually rediscovered their long lost mojo. Before long, a technical rebound took hold and the fast-money folks jumped in to scoop up some bargains. Thus, the major indices wound up erasing more than half the day's early decline in relatively short order.

I guess this is a rather long-winded way of saying that stocks initially tanked on fear/uncertainty (aka "jitters") and then rebounded on technicals. But from my seat, this was simply another example of those selling every top they see being met by those who have missed the run. And so it goes.

Current Market Drivers

We strive to identify the driving forces behind the market action on a daily basis. The thinking is that if we can both identify and understand why stocks are doing what they are doing on a short-term basis; we are not likely to be surprised/blind-sided by a big move. Listed below are what we believe to be the driving forces of the current market (Listed in order of importance).

      1. The State of Trump Administration Policies
      2. The State of the U.S. Economy
      3. The State of Global Central Bank Policies
      4. The State of Bond Yields

Thought For The Day:

"It's a beautiful day, don't let it get away" -Bono


Wishing you green screens and all the best for a great day,

David D. Moenning
Chief Investment Officer
Sowell Management Services

Disclosure: At the time of publication, Mr. Moenning and/or Sowell Management Services held long positions in the following securities mentioned: none. Note that positions may change at any time.

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The opinions and forecasts expressed herein are those of Mr. David Moenning and may not actually come to pass. Mr. Moenning's opinions and viewpoints regarding the future of the markets should not be construed as recommendations. The analysis and information in this report is for informational purposes only. No part of the material presented in this report is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any investment program.

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