Combined catalysts that constantly deflect both rallies and declines are starting to wane; although there’s no argument that these battle line skirmishes ‘can’ persist for awhile, until heavy turbulence returns. What we had on Thursday actually broke only the 100-day Moving Average, with an excessive focus on Trump and protectionism.

That means that if the DJIA drops another 500 points it might dissuade the President from implementing anything without negotiation (Art of the Deal after all); and you’d get a sharp rebound next week. However as the overall (3rd day down of 1000 points now for the Dow) decline has a genesis ‘other than’ the President’s handy excuse they can pile onto; the ensuing rebound (if things go that way) would be another selling spot as well. If the tariffs go ahead and get employed; well we’ll plunge lower as the market would eventually do anyway. It’s just a question of how fast.

At no time this year has there been much upside potential as at all times there has been lots of risk.  In any event the real kicker today was of course New York Fed President Bill Dudley talking of 4 rate hikes. Of course that was completely ignored once the President spoke of tariffs. 

So far the hits have been modest air-pockets (yes the 10% peak-trough S&P February projected break was moderate; and the rebound within a defined proportional ‘automatic rally’ outlined). The point is that whether or not corrective actions are within context of the forecast including the Spring rally effort (successful or not); turbulence will likely strike with a vengeance as time goes on. And both the early February projected hit, and this week’s 1000 point Dow decline so far; are not huge percentage drops; and tend to get rescued because of fund liquidity concerns that I talked about last night.

Going forward after a couple days, it could enter a period of ‘clear air’ turbulence, which means radar won’t show much ahead (or if so most pundits will ignore signs that are already warning risks are the primary concern now; rather than upside opportunity), and then again you get a sudden downdraft which will be blamed on rates or any other backdrop they feel like citing. And that’s whether or not tariffs are imposed.