On Tuesday, the markets belched a big decline, experiencing their first drop of more than 1% in the major indices in some 111 trading days. That’s a long time without the sellers asserting themselves, and it was a pullback that was long overdue.
Markets have settled a bit today, but make no mistake, the selling across the board Tuesday was Wall Street letting Washington know that if there is no progress on Obamacare repeal/replace when the House votes on Thursday, then equity values are going to get rocked.
As I’ve said many times here in this publication, and to subscribers of my Successful ETF Investing advisory service, the key to keeping the Trump rally going is material progress on the pro-growth policy agenda.
Anything that threatens that agenda from passing through Congress is going to be stock market negative. Now, it appears there will be a close vote in the House on passage of the Republican health care bill. If that bill goes down to defeat tomorrow, look for the markets to make a Tuesday redux.
Conversely, if the health care bill is passed in the House, then I think markets could experience a sort of relief rally, i.e., relief that something can get agreed upon in at least one side of Congress. The issue then goes to the Senate, where the bill will be reworked again. Uncertainty about the bill’s passage no doubt will cast a shadow of doubt and apprehension over Wall Street.
Click here to read the the full article, “A Dangerous Glitch in the ETF Matrix“.