Excesses of the Bull Market on Mardi Gras

Today is a busy day across the country, with both Mardi Gras festivities and the New Hampshire Primary. 

Regarding the Mardi Gras partying, followed by Ash Wednesday and the beginning of Lent, markets also display a similar pattern, broadly speaking, of enjoying the complacency and excesses of a long bull run, before eventually the cleansing process sets in of a correction. 

Case in point: Consider how many times you may have heard bulls openly mock pullbacks in recent years, taunting bears for their inability to hold the market down for more than a few days--Even more than a few hours, at times, before a V-shaped rally and short squeezed commenced. 

That type of behavior has died down in recent months, especially in 2016, as the serious nature of the market downside action offers an old-fashioned less in humble pie as trading accounts lose a digit or two (or all of them). 

You can be sure that the excesses of any given bull will always be present, as human emotions of greed and fear still dominate the tape, even in this day and age of HFT and algorithms. Thus, the more things change, they more they assuredly stay the same.

And the purpose of a correction/bear market is to effectively clean out the excesses and set the stage for a new bull run higher. 

Shorter-term, we saw a sharp rally off the opening weakness this morning. However, bulls are having some issues building on their progress.

For the rest of the morning, we are keying off the SPY 30-minute chart, below. Note the 20-period moving average (orange line), acting as a dividing line here as to whether we see a continuation of the morning rally or roll back over into the deep red. The small caps have a similar look.