S&P 500 Falls Into Correction Ahead of CPI Report

It was another chaotic day for the market, but there was some bounce and the Russell 2000 IWM managed a small gain after a sharp intraday drop. 

The S&P 500 fell enough at midday to push it down more than 10% from the high it hit on February 19. That is "correction" territory, but President Trump backed off on some tariffs again, announced progress in peace talks between Ukraine and Russia and stated he doesn’t see a recession at all.

There is a CPI report due on Wednesday morning, which may be the reason that there wasn’t a better close after all of the Trump talk on Tuesday afternoon.

One of the main reasons that the market has been so difficult lately is that it can’t handle public negotiations. Investors panic at Trump’s bluffing and the things that are usually negotiated behind closed doors. Trump is making it all public, and the market is confused and unsettled by it.

A primary reason that the market has been struggling so far this week is that Trump indicated that there was likely to be a period of transition. Trump has always cared about the market, but if he is perceived as too worried about the market reaction, it will make it harder for him to be a tough negotiator.

Unfortunately, Trump has a lot more deal-making and negotiating to do, and it is likely to be very public and keep stock market volatility elevated.

Market players still need to deal with broken charts and a high level of uncertainty, but Trump indicated some sensitivity about the market reaction, which may help to provide some support.

A lot of work will be needed to repair the damage that has been done, but the good news is that there are some very good opportunities developing. I’m patiently waiting for charts to develop before I deploy more capital.

Have a good evening. I’ll see you tomorrow.

At the time of publication, DePorre had no positions in any securities mentioned.