Calm returned and SPX has long since surpassed the high and Dbl Top of yesterday - lesson here is that short term Current Affairs will only cause short term reactions.
M Scot Peck once wrote that he encountered a self made multi millionaire who recounted to the author of his early days in business and how he felt then that ‘the wolf was at the door’ meaning that his fledgling enterprise could fail easily and he would lose everything.
Scot Peck realized after talking at length that the businessman still believed that the wolf was there - even though he had millions.
One of the old trading masters likened the market to an unseen grey entity that has a unique personality. Mark Douglas wrote of ‘trading in the zone’ - a euphemism for getting in tune with that personality (market sentiment).
It’s possible to get to learn sentiment by watching price react to events/news. The market is like the guy with the millions - that wolf is at the door thus price will fall much quicker than it will rise.
The market, again like the millionaire, is money already accrued and it is seeking to accrue more. It will seek an accruing asset by default thus trends are born. It will dump an asset if it believes that the asset will no long rise in the future - thus if some item of current affairs is perceived as a game changer then the trend will end and the accruals will be liquidated.
Some guys are calling the senate results yesterday as a game changer - including Citi - and suggesting sell USD and buy Gold.
IMO it’s way too early to make that call, the market will decide only when it sees economic policy formation - then when it does it will be right.