Serious violations to all the cycle work as markets ended at or close to high last Friday. The only condition bears have working is a divergence in the Transports which is well off the highs. Friday was a nothing burger. The apparent story of the week was the continuation of the tax plan story. Every time they mention tax reform, markets rally. Throughout this season, I’ve mentioned the one condition we’ve been missing is euphoria. Complacency? There’s plenty of that. Last week another terrorist attack hit New York City, this time within blocks of Wall Street yet markets went undeterred.

It will be interesting to see what happens today given the tragedy in Texas yesterday because we are starting to see a tale of two worlds. On the one hand, we see the fracture of civil society yet despite all this the freight train keeps rolling. The former Assistant Director for Counterintelligence at the FBI under the Obama administration for only one-year (Feb 2011-July 2012) Cesare Frank Figliuzzi said Americans must learn to ‘accept’ terror attacks as a ‘new way of life’ because that’s a better outcome than being called racist.

Mr. Figliuzzi, you don’t know America. First of all, we are not a racist country. Certainly, there are issues which I’ll get to in a minute. But I had to learn something very important from my immigrant father who came here from Europe after WWII. I’ve despaired many times over the past couple of years watching the events manifest in this country. It took a newcomer to America to remind me he always has faith in the ‘sleeping giant that takes a while to get angry but always wakes up in time.’ But here’s the problem. I’ve talked to you all year about historic complacency in the VIX that eventually would spill into other areas of our society. For the 3rd time in 5 weeks, an attack of one sort or another has hit the homeland and the response in the best case inappropriate and worst case disgraceful. It’s not a manifestation of the country, it’s an outcome of the mood of the crowd. Last week I told you 1937 eventually succumbed to a series of geopolitical issues. The same thing is going to happen again, no matter how long it might take.

If we are not there now, we will be there because what goes up, always comes down. Right now, we are at the back end of this cycling season and having missed October, the seasonals suggest something smaller for now as we are getting close to the holidays. You can look it up, I don’t think we’ve ever seen a bear market commence between Thanksgiving and Christmas. January in an entirely different matter.