The market is paying far more attention to the negatives than the positives. On Monday, it was Brexit, technical breakdowns, and perhaps more worry over the Mueller investigation.
"I think that Santa's making his own list and traders are making a list that has more than a few negatives on it," UBS Art Cashin quipped to CNBC.
In theory, there were several positives that should have helped the markets last week: Fed officials signaled fewer rate hikes down the road, and that was a huge positive. Also positive was the announcement of a U.S.-China tariff 'truce " (despite the confusion around it), not to mention an OPEC production agreement.
In normal markets, that would have been enough to move stocks up, but this is not a normal market.
On Monday, the S&P opened up, then drifted lower and moved into negative territory less than 20 minutes later. That fits with the recent pattern. Whether the market opens up or down, selling begins soon after the open.
Stocks took another leg down at two points Monday: first, when Britain's Prime Minister Theresa May announced to Parliament she would delay a vote on the U.K.'s plan to leave the European Union, and then just before 11 a.m. ET, when the S&P broke below its recent October 29 low of 2,603 and quickly dropped another 20 points in the next five minutes.
Why is Brexit an issue for stocks? Because it greatly complicates the plans for U.S. multinationals and their businesses in Europe. Most corporations have been quiet in reporting on Brexit's effect because they don't know what is going to happen. Today's action only complicates the outcome.
The market also did not get any help on the two biggest issues it faces: trade and tariffs and global economic slowdown. Over the weekend, U. S. Trade Representative Robert Lighthizer reiterated that if there was no progress on tariffs and trade in the next 90 days, more tariffs were coming. Japan's third quarter GDP was revised to a greater than expected fall of 2.5 percent, and Chinese trade for November (both imports and exports) was lighter than expected, all of which reinforces the "global slowing" theme.
Finally, there is Robert Mueller's investigation, which is heating up. I was asked several times over the weekend to what extent it was affecting the markets. To the extent that President Trump could be in greater legal and political risk, it is certainly an issue, but it's difficult to quantify what percentage of the market's decline is due to this concern.
I believe it's a partial factor for a simple reason: I'm getting asked a lot about it by traders. One of Pisani's Laws of Broadcast Journalism holds that "You know you're in trouble when your best sources call YOU and ask YOU what's going on." This inverts the normal interview process, where I ask the questions. When traders are confused and not sure what's going on, the natural response is, "I'm not sure, Bob, what do you think?"
A lot of people are asking what I think these days.
But the biggest problem of all is the market action itself. Cashin noted — as have others —- that buying an oversold bounce has not been rewarded recently. "Every rally has failed and we're back down to the lows. So people are going to say, whoa, how often am I going to try and buy the dip and trade the turn when all other rallies keep failing?," Cashin asked.