In yesterday's article, Chris Rowe pointed out that adviser sentiment is so bullish that a correction in US stocks is looking increasingly likely.
I hate to pile on the doom and gloom, but I am inclined to agree. Dealing room experience has taught me that how the market reacts to news tells a story, and the at best muted reaction to news of a bipartisan US budget deal this morning is an example.
If traders were still raging bulls, even the news of a limited deal such as this that had been leaked and priced in earlier, would have been seen as an excuse to buy. As I write, however, the S&P 500 is around 1790, down around 0.75%.
The one obvious reason is a growing belief that the Fed will begin tapering earlier than previously expected following next week’s meeting. But really the prospect of that, given the last jobs report, is nothing new.