Not So Resilient

This is not your 2013 or 2014 market.  Earlier in this bull market, the market would shrug off something so minor like a Greek election, especially when bad news was expected.  We got the bad news in Greece, and the market sold off anyway despite expecting.  The weak close on Friday was also something unusual, coming so soon after a strong bounce on the ECB announcement.

Europe continues to outperform the US, which is quite a change in character for this bull market.  I don't remember too many periods when Europe was doing better, it usually occurred after a hard bottom and Europe was playing catch up.  Not so much anymore.  It seems like investors are shifting their bets to European equities, looking at how cheap the euro has gotten, and the potential benefits that provides to European exporters.  At the same time, earnings for US multinationals and the energy sector will be weak, due to the strong dollar and lack of global growth.  The theme of US as best house in a bad neighborhood has been beaten to death.  The US equity market is saturated with investor confidence, just when I am seeing signs of long term topping price action.

Right now, I am not interested in bottom fishing euro or crude oil.  Those markets have a deeply entrenched bearish bias that will not be shaken so easily.  Bounces for euro and crude oil will be brief, and not worth playing for yet.

There is a Fed meeting on Wednesday, so I expect any downside to be contained till then.  If there is one theme of this bull market that stubbornly remains intact, it is equities go up on Fed day theme.  Expecting some equity strength over the next two days heading into Wednesday's Fed decision, it should be a nonevent, but odds are that buyers will be more urgent than sellers going into it.