My bullish bias for the last three weeks was based on the seemingly irrepressible power of the impulse leg initiated in late June from 1257. By now, however, it would appear that the epic fight on Capitol Hill is coming close to repressing bull-mania, if not stopping it altogether. Are we seeing the long-awaited collision between the irresistible force of a global money blowout and the immovable object of a looming Second Great Depression? Perhaps. Whatever the case, there is no denying the weight of supply that began accumulating in February, when the broad averages embarked on a volatile move sideways that may finally be ready to give up the ghost. Even so, and strictly speaking, the bullish impulse leg remains intact, and even a further selloff to 1284.50 would merely corrected it in normal abcd fashion. Whatever happens, there are no big-picture trades to consider — unless we want to look at put butterflies well below these levels. And it’s possible we shall. For the time being, though, and until stocks take a possible last-gasp leap on news of whatever rancid deal is hatched on Capitol Hill, we’ll simply back away.
