The euphoria in the equity markets slowed down a bit on Tuesday. Equities markets had their biggest drop slide of the year, and the biggest drop since prior to the election. The S&P 500 had its first 1% decline since October 11th, down 1.2% ,and the Dow futures were down 258 points, a 1.24% drop from Monday.
Cloud of concern
Some concerns coming out of D.C. are starting to increase. The possibility of Thursday’s health care vote being pushed back, or not passing at all seem to have been a factor in Tuesday’s moves. The idea that not everyone is on the same page when it comes to health care is front and center. The same could be said for tax reform. Market participants who were bullish to the idea of quick action on repeal and replace , and reform, may be pumping the brakes a bit . These events may still happen, but perhaps at a different time frame than had been expected.
More to come?
While the Dow was down closed down over 250 points, it is only a little more than 1% correction. The possibility of a larger one day move is still out there. Thursday’s vote in the House of Representatives could give the market some more jitters. I’m not looking for a big pull back yet, but any further concerns about a healthcare plan not passing would keep the bulls in their pen.
I’m looking for some downside protection using puts and put spreads, with different time frames. Feel free to contact me to discuss trade strategies.
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