Grading the market: A routine pullback or has the trade war damned the S&P 500 to a trading range?

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An urgent trade-talks deadline and the Uber IPO drove the harshest pullback of the year for stocks but also served to test the resilience of Wall Street's bulls.

For a second time in eight months, sellers pounced and buyers balked as the S&P pushed toward 2950.

Yet at this point, last week's jarring stock-index drop of 4% from a record high at its lowest point appears a fairly routine gut check for the bulls — albeit one animated by extraordinary trade-diplomacy-by-tweet and the added anxiety of having come right about where the broad indexes peaked last year before a brutal downturn.seen at least a 5% dip from the year's high — and one of them came just two years ago.

Wall Street has been living with trade-war static for more than a year, only intermittently finding cause to punish equity values. The real stakes are the implications for China's contribution to world growth or the risk of financial-market stress. This is somewhat mitigated by the fact that the forward one-year price/earnings multiple for the index is not terribly stretched — right at the five-year average of 16.5. And of course, bond yields anchored at the low end of their two-year range with corporate bond spreads benign are a support for valuations.

That's no longer quite the case, and last week saw the gears slipping a bit in what had been a clockwork sector rotation powering a methodical rally.Volatility Index

 

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That trading range is derived from the exchange of money between investors—the Ponzi process. Only observable truth 👇

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