"The Great Rotation"-Harsh but a Garden Variety Correction

Looking back historically at previous corrections throughout the broad market indices. We are looking at a W pattern with Bollinger bands. You can see the previous corrections from Gov't shutdown in 2011, Oil rout of 2015-2016, and now as I call the "Great Rotation". Earnings were going to be the grand escalator to take out new high's in the S&P. Unfortunately, many of the mega-cap stocks were already priced for perfection and anything less than a stellar quarter and amazing guidance was going to lead as a unraveling of many of these heavy weights. It seems that even the retailers have been a bit tepid even though many experts are saying that the US consumer is as strong as its ever been. My case that we are not going into a full bear market, not quite yet at least, interest rates have not softened, Gold has not pick it up (off of a fear trade), and the volatility Index (VXX) has stalled for the 2nd time a the 40 mark, a large technical resistance for the VXX.

Then what turns the market? My theory is that all the economic data that we have been receiving lately and the lack of any threat of major inflation, I feel the Fed will pause in December and kick the can down to Jan-Feb of 2019 to look at raising rates. I think that will be the catalyst to ensure that our markets still have a relatively accommodating Fed. (Check out Jim Grant's CNBC Interview from 11/20/2018).

Take this opportunity do your research and find values in equities that have been oversold and keep your stops tight. Happy Trading & Happy Thanksgiving!
-KG