Forget about this healthcare decision sideshow (okay don’t totally forget about it, read about it here) – what’s happening today is a realization that the May correction is still in progress, nothing from the first two weeks of June has really meant anything at all. The market may have sold off more after the decision but it was down anyway, Spanish bond yields above 7 and weakness from Germany’s employment number was going to mean a risk-off day here regardless.
In terms of today, my traders point out the following:
The depths of the May weakness were met with complacency rather than panic, not enough fear at those lows set us up for a continuation of the correction. Especially compared to the panic from last fall.
You start getting closer to the washout you need when even the good stuff gets hit – have a peek at the utilities, even they can’t catch a bid here. This is productive, believe it or not.
We’re going to need a bit more fear and a lot more throwing out the good with the bad.