For the first time since September, the market is coming under significant selling pressure. Dow 16,000 has been lost. The CBOE Volatility Index (VIX) is breaking out as traders rush into put option protection against continues losses. Breadth is collapsing.
There are many catalysts, from overextended sentiment to a reversal of the ultra-popular yen carry trade. But above all, it’s the creeping realization a “Dectaper” looks increasingly likely, with Q3 GDP growth surging (albeit on unsustainable inventory accumulation) and the job market firming enough that the Federal Reserve, if it wants to preserve its credibility, will be forced to pull back on its ongoing $85 billion-a-month bond purchase stimulus.
Three Dow Jones Industrial Average components already are rolling over. These Dogs of the Dow should be avoided at the very least, and if you’re feeling aggressive, consider these as short opportunities.