Home Morning Commentary Morning Commentary – Sell Off

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If you thought that the volatility prior to last Friday was high, then I imagine that Friday’s drop really surprised you, especially if you have just started trading.  The volatility was elevated to be sure; however, we have seen it much higher.

What caused the sudden sell-off in US equities? There were tweets and a “Special Report” from ABC news that caused the ruckus. During the live report, Brian Ross of ABC News, reported that Michael Flynn was prepared to testify against president Trump to the FBI.  What’s more, suggested the ABC report, was that Flynn would say that Trump told him to contact the Russians while he was still a candidate for the presidency.

This is how the market reacted.

The media salivated over the news.  It was the smoking gun, they thought, that could be used to bring down the president…because they don’t like him. Apparently there is still no evidence of collusion between candidate Trump and the Russian government, since this Special Report could be classified as further proof of Fake News.

ABC News has since retracted its salacious story, because it wasn’t true (fake then?).  The truth apparently is that, after he was elected president, Trump asked Flynn to contact the Russians to repair relations between the two countries, and to ask for help in defeating ISIS.

Well, that doesn’t sound at all the way ABC News initially reported it so you should be wondering how the markets reacted Sunday evening, once they reopened.  As of the typing of this report, the S&P500 futures have spiked nearly TWENTY POINTS higher.  

That’s right, the ES has reached new all-time highs once again.  How many of the board of directors, or producers, were buying at-the-money calls at the depths of Friday’s sell-off?  Meh, they’re not smart enough for that; they’re just seething with anger that Hillary is still the loser.  And because of that, they’re OK with creating and disseminating Fake News.

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