Every headline in the media will likely say that the cause of today's selloff was the release of the FOMC minutes, where the Fed basically said that they see no more rate cuts in the cards, inflation is creeping higher, and GDP growth will likely be slower.
But these aren't really new revelations. We already knew this. There is a saying in the market that the 'news breaks with the cycle'. I have been saying for over a week that the market was due for a correction, and that I was waiting before putting any cash to work.
So today, the market was already setup to add to yesterday's downside move. The release of the FOMC minutes was just news, but the market was already moving down and would have likely declined today regardless of what the news was.
The S&P 500 has now declined roughly -3.5% from Monday's intraday highs. I am not looking for more than a 3-5% correction right here, so we are getting in ! the range where I will be looking to put some of my cash to work.
The sentiment indicators spiked higher today, which is a good sign. I would be more worried about this selloff if it was greeted with a yawn by investors. But this does not appear to be the case. Here is a quick look at today's levels:
- The ARMS Index closed very high at 1.94
- The CBOE put/call also closed high at 1.17
- The ISEE call/put was fairly low at 115
- The VIX spiked another +5.8% to 18.6
The big wildcard is obviously oil. Oil is in a full blown bubble, no doubt about it. The surprising reaction today was that even the energy stocks all closed lower despite the record spike in oil. So no one is winning with oil this high, except for the oil speculators themselves.
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