At pretty much any point since the Liberation Day lows, the market was acting differently. Yes, there would be dips (usually in a reaction to tariff or other political news) and then it would stabilize and the dip buying started. Once the rally started, momentum took over.
That hasn't been the case lately. Since late October, the market has moved in fits and starts. Momentum has been there some times but not in others. I'm tempted to think this is all angst ahead of Wednesday's Nvidia report led by hyperscalers but I'm also worried it's because the Fed has taken away the punch bowl.
I was baffled that the market didn't start to sell off on Oct 30 after Powell said another rate cut in December wasn't certain and "far from it" that was the sign. Instead, the market continued for two weeks to price in a high chance of a December cut. Last week. for some reason, the market finally got the message and the December odds have dwindled to 36%.
The thing is, the Fed put is still in play. They have 375 bps of ammunition and will use it if the jobs market slackens. I certainly don't see an increase in inflation looming either (stubbornness is a different story).
All this to say that this price action doesn't look great and that we're a couple bad days away from breaking a series of lows from 6550 to 6631 that really need to hold during a bullish seasonal period.
For what it's worth, there has been no news behind the latest drop.
