Film Noir Market

One of the central elements of the film noir genre is a fatalistic storyline. Fatalistic is defined as the belief or attitude that all events are predetermined, inevitable, and impossible for humans to change or avoid.

Thus, when viewing the price action across markets these days, one cannot help but wonder if we have a fatalistic storyline here as well, what with the deteriorating credit and bond markets seemingly offset (and certainly ignored) by the S&P and Nasdaq printing fresh highs today. 

That said, the Dow and small caps (the latter below on the IWM ETF daily chart) are clearly diverging from the S&P and Nasdaq insofar as not only being well before their own respective prior highs, but the small caps are soundly in the red into the final hour of today's session. Even though the Dow is green, both the Dow and small caps are at risk of yet another bear flag (highlighted below) in the context of a corrective downtrend since both put in their highs back in early-August. 

Oil also reversed to green today, holding the gains as I write this. Seeing crude red this morning brought out tons of gleeful top callers for "black gold," which reinforces the idea that the pain trade for oil is likely still much higher. I see clean, bullish overall chart for the USO ETF. You will note how impressive that is considering the amount of jawboning and nonstop attempts by politicians to get the price of oil down for many months now. 

Tomorrow's main event figures to the Fed Minutes from the September FOMC. The Nasdaq has gone straight up since the September 16th FOMC rate hike, which can be construed as a post-event short squeeze. But that was three weeks ago at this point, which sets up a possible sell-the-news reaction tomorrow should the Minutes come in more hawkish than expected. 

Overall, much like a classic film noir we have a market tempting fate one too many times, with equities practically daring to get caught. It seems like they will keep get away with it...or will they?