It’s almost as if someone is ringing a silent fire alarm because there continues to be a mass exodus from the market, countering the popular financial television sound bite that the stock market is the only game in town.  For the most part, investors have been selling like crazy and volume has been anemic throughout the entire rally; however, it’s getting worse.

Last week, there was more than seven billion dollars in equity outflows – the highest in 12 weeks.  People are dumping stocks by the boatload even as it’s clear the Fed won’t hike rates for a long time.  In fact, I’m beginning to doubt that even December is in play.

Last Friday was a great proxy for the indifference or even the disdain for the market.  Stocks stumbled through a sloppy session that finished the week slightly higher, but the last two days showed the real story.  The Dow peaked at 10:30 on Thursday (On the Street, they say that’s the exact time the pros make their move after allowing the amateurs to make impulsive trades right out of the gate) at 18,447, and closed Friday at 18,261. 

The decline in the market traced a pullback in crude oil and continued fading optimism at the Federal Reserve on the economy in the second half of 2016.

It’s very interesting that the recent string of economic data released have shown disappointment that should have the ‘bad news is good news’ crowd excited.  That simple rationale just isn’t correct anymore; in fact, this market needs good news to breakout from here.  

All of a sudden, that robust second-half surge that spooked at least three members of the Federal Reserve last week is in swift retreat.  The Atlanta Fed initially saw the current quarter growing at 3.5%, but the model currently sees 2.9%.

Boom to Bust

The New York Fed model sees a more pronounced decline in the pace of growth in the second half of the year.  At one point, the NY Fed saw 3.1% growth for the current quarter and 2.1% for the fourth quarter, but it’s now modeling 2.3% and 1.2%, respectively. 

I don’t want to sound like a broken record, but this market needs a catalyst and until it gets one, the best-case scenario is stocks gyrating in a narrow range.

Today’s Session

The market is opening lower as angst increases over corporate earnings.  Oil is higher and could be a difference-maker this week.   West Texas Intermediate has made a series of lower highs and prospects of an OPEC output freeze are murky.  The best news for crude this week would be larger declines in inventories. 

The crude chart points to a major move coming out of a pennant formation.