Depraved Heart Bulls

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In American criminal law, Depraved-heart murder is the unlawful killing of another human being resulting from an act of reckless disregard/extreme indifference for the safety of others. It is considered a second degree murder instead of first because of the sheer recklessness as opposed to cold premeditation. The hallmark case for depraved-heart murder involved a couple of teenagers playing Russian roulette, and one shot the other thinking that the chamber was empty.

While the bulls may not be intentionally trying to kill this market, they sure are showing some harmful indifference and are not doing themselves any favors here. With every chance to take the ball and run off of last week’s hold of 1120 support on the S&P 500, the rally from Monday through mid-afternoon Tuesday has been stopped in its tracks. The S&P is struggling with its 20 day moving average just above, and the danger of making a lower high would be a huge boost to their bear thesis of looking for an eventual breakdown from the two month trading range.

Although the market has not exactly rolled over, you would be hard-pressed to find many actionable long trades to hold for more than a few minutes. There is also an argument that silver had led equities higher in the early part of this year. Today, that precious metal continues its ferocious slide, which smacks of forced selling, risk aversion, and perhaps a deeper correction.

The bulls are still in the game, but consistently having rallies faded is not going to help the cause. A strong final hour and follow-through would go a long way towards building something sustainable. There are also the end of month and quarter (not to mention the Jewish holidays) aspects of the market to contend with, but that usually adds to the randomness of the action anyway.