This is a weekly chart of the S&P 500 since the beginning of this year:
In essence, 2018 has been a wash for both the bullish and bearish camps, as the S&P 500 has simply been toying with investor emotions year to date.
All the meanwhile, this is what's happening in the world of interest rates:
And here is a look at crude oil since the beginning of 2018:
To date, since the beginning of the post-crisis secular bull market, we have been in an environment with flat/down interest rates and energy prices. 2018 marks the first year during this secular bull that the interest rate/energy picture has been modified in such a way that it transforms the economic picture as we know it.
It is not unreasonable then to assume that while the secular bull market will remain intact, it will more than likely take on a different form moving forward. The underpinnings of what created this bull market (cheap money and cheap energy) have reversed. Equities then will either reverse course, turning into a bear market OR the bull market will be modified to a point that former leaders turn to laggards and new leaders emerge based on the shifting landscape.
Since I am of the view that we are in what will turn out to be an eye-popping bull run that is currently in its middle stages, the prospects of a prolonged, brutal bear market doesn't necessarily register. What does strike a chord is an adjustment period, such as the one we are facing currently, that could end up donning a bear market mask in an effort to recalibrate allocation so that the next prolonged period of sustained gains can take place.
In the meantime, the weakness that has taken place during the first couple weeks of October all but guarantees a sloppy outcome for equities for the remainder of the month that could drag well into November. The weakness will end up being a buying opportunity for equities, however, at some point in the not too distant future.
As good a time as any to detach from tick watching, digest the earnings picture and return to the screen in November.
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